Answered by Tom Conner
How Income Protection works
Income protection insurance pays out a monthly benefit if you are unable to work due to incapacity caused by illness or injury.
This benefit is paid until you recover and return to work or reach the maximum payout length and would be paid on top of any state benefits for which you qualify.
The payout can be used to replace the lost income allowing you to meet your monthly outgoings which you might struggle to pay on government employment support allowance (ESA).
How a successful claim may affect your state benefit
The payout may affect your entitlement to means tested state benefits but not contribution based ESA which is based on your national insurance contributions. Benefits rules change from time to time so you would need to clarify this with Jobcentre Plus.
If you are insured up to the maximum amount allowed by the insurer (for example 55% of your gross income with LV) then the insurer will reduce their payout by the amount of ESA that you are claiming so that your continuing income is not over the maximum amount that they allow. The idea behind this is that you should not receive payments totalling more than your income before you started to claim.
Frequently Asked Income Protection Insurance Questions
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