Personal Accident Insurance vs. Income Protection Cover

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By Cai Bradley

on Wednesday 27 November 2019

Injured man on crutches shaking employer s hand

Being out of work due to an illness or injury can have drastic consequences for all types of workers, including those who are self-employed and employees with insufficient sick pay at work.

Thankfully, there are insurance options available to the one million people that find themselves unable to work due to a serious illness or injury each year in the UK, but which policy is best?

Here’s your simple guide to two options: income protection insurance and personal accident insurance.

What is personal accident cover?

Personal accident cover, also known as personal injury insurance, is a policy that pays out compensation in the form of a lump sum if ever you suffer a serious injury or pass away as a result of an accident.

This type of insurance protects you and your family against the loss of income if ever you’re unable to work and can help pay for bills, expenses, and the cost of every-day life.

Personal accident insurance is typically offered as an optional add-on to your life insurance policy, but can be purchased separately as well. Most providers usually offer it to anyone aged between 18 and 69.

What does personal accident insurance cover in the UK?

Personal accident insurance covers injuries like fractures and dislocations, as well as more lasting issues such as loss of sight.

Instances typically covered include:

  • Accidents or injuries at work
  • Injuries caused by violence
  • Injuries or death caused by a road traffic accident
  • Permanent disability
  • Injuries caused by a slip
  • Loss of body parts (or usage of body parts)

Personal injury cover is often popular with those who work on locations where serious accidents are more likely to occur, such as a construction site, for example.

You may find that this policy does not cover other reasons for missing work though, such as sickness or mental health issues.

Remember that the payout amount you receive can vary depending on the severity of the injury and the level of cover you opt for.

What is income protection insurance in the UK?

Income protection insurance is a long-term policy that provides a replacement for part of your income if ever you are unable to work as a result of illness, injury, disability and unemployment*.

Unlike personal accident cover, which pays out a lump sum, income protection insurance offers a long-term solution by providing ongoing payments until you are ready to go back to work or at a retiring age (as per your policy’s terms).

It is a reliable form of income that enables you to pay the bills and provide for your family as usual while you are out of work.

What does IP insurance cover?

Income protection provides regular pay-outs to help you maintain your (and your family’s) standard of living while you’re unable to earn a wage. It typically covers:

  • Injury – Protection against accidents that have left you injured and unable to work.
  • Illness – Cover for illnesses and sicknesses that mean you are deemed unfit to work.
  • Unemployment* – Some policies protect against becoming involuntarily redundant.

Unlike personal accident cover, which only offers the one payout, income protection insurance could provide you with up to 65% of your gross income every month if you are left unemployed, but be sure to check your policy’s terms before signing on the dotted line.

*There is a type of income protection policy that offers cover for those who have become unemployed as a result of involuntary redundancy, but most policies focus on those who are injured or unwell. Don’t hesitate to ask our advisors about this when applying for cover.

Why do I need income protection insurance?

The benefits of income protection cover are vast. 

It replaces a percentage of your income up to around 65% of what you would usually earn if ever you're unable to work due to illness, injury or even (sometimes) redundancy. 

Income protection can provide a pay out until you are ready to go back to work or retire - it is a long-term solution to being out of work and allows you to spend your time focusing on recovering, rather than paying your bills.

Additionally, you are able to claim as many times as you need to while your policy is active.

Income protection for the self-employed

You’re most likely to need income protection insurance if you are self-employed or employed with insufficient sick pay from your employer.

Regardless of whether you have dependants or simply need enough money to get by in your day-to-day life, it’s important that you have something in place if ever you are unable to work.

Read more: Self-Employed Income Protection

Is personal accident insurance the same as income protection?

Although both insurance policies provide financial assistance while you’re out of work, there are quite significant differences between the two.

Difference between income protection cover and personal accident insurance is below...

Income protection cover offers regular, ongoing payments as  a pay-out, meaning that it is a useful long-term solution for policyholders. Some income protection policies can also cover involuntary redundancy, and they are not able to be cancelled by the insurance provider, only the policyholder. The provider of IP cover is typically a specialist life insurance company.

Contrastingly, personal accident insurance offers just one lump sum pay-out, meaning that it is more of a short-term solution. It only covers personal injury, rather than all illnesses and redundancy. Unlike IP, it can be cancelled by the insurance provider, and is usually covered by general insurance companies, rather than specific life cover providers.  

As you can see above, there are some significant differences between income protection insurance and personal accident cover.

The most suitable policy for you depends on your individual situation, but there’s no doubting that income protection offers a more extensive level of cover and a long-term, reliable solution to being unable to work through no fault of your own.

Unite Life insurance quotes

If anything were to happen to you, like an illness or injury, would you be able to survive on savings or sick pay from your employer? If the answer is no, an insurance policy like income protection insurance is vital.

Here at Unite Life, we recommend income protection cover for both those who are self-employed and employees without a sufficient sick pay scheme at work. It offers a long-term solution to being off-work by providing you with a regular income until the age of retirement or until you’re ready to go back to work.

For a free, no-obligation chat about your insurance options, give us a call using the number below or complete our short contact form and we’ll be in touch at a time that best suits you.

08000 106 194

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