Protection insurance and cancer

Protection insurance can help cover your costs if you cannot work because of your health. There are different types of protection insurance:

• Critical illness insurance pays out a lump sum if you get a serious illness. 
• Waiver of premium benefit can carry on paying your life insurance or critical illness cover premiums if you cannot work because of an illness or injury.
• Income protection insurance pays you a regular income to replace a salary when you cannot work.
• Payment protection insurance (PPI) policies can cover payments for things such as mortgages, loans and credit cards.

You can buy income protection insurance to pay out a monthly income if you are unable to work because of illness or injury.

You choose the level of income you would want if this happened to you. You do this when you start the policy. It is usually 50% to 75% of your gross monthly work salary. It does not pay out straight away if you cannot work.

You agree on a waiting time. This is called a deferred period. It can be anything from 4 weeks to 1 year. The longer the wait, the cheaper your monthly premium will be. Before deciding on the deferred period, you might want to think about what sick pay you would get if you could not work.

You also choose the type of cover. It will affect the cost. You can buy a policy that gives you cover if you cannot do:

• your own job or occupation
• your job or a similar one you are qualified or have the experience for
• any kind of work.

When you buy income protection insurance, you will be asked about:

• your health
• the health of people you are closely related to, such as your parents or siblings.

You can also choose how you want to pay for the policy, through:

• guaranteed premiums, where you pay the same monthly payment for the life of the policy – these usually cost more at the start of the policy
• reviewable premiums, where your monthly payments get reviewed, usually every 5 years – monthly payments are likely to go up over time
• age-costed premiums, where your payments start low but get higher as you get older.

If you claim on the insurance, the payments you get will often carry on until you go back to work or retire. When you take out the policy, you decide when the payments and your cover stop. This could be your chosen retirement date. But some policies will only pay out for a fixed time.

Getting payments from your income protection insurance can affect the benefits you get or are eligible for.

Mortgage payment protection insurance pays your mortgage if you cannot work due to illness, injury or redundancy. You usually need to buy it at the start of your mortgage. Depending on the policy, it can also cover your monthly bill payments. It might be called a short-term income protection insurance (STIP).

If you make a claim, there will be a waiting period, usually between 1 and 2 months, before the monthly payments start. The payments usually come to you rather than your mortgage lender. The insurance usually only pays out for a fixed time, often 12 to 24 months.

Short-term income protection insurance is a policy you renew every year. It gives you a monthly payment if you cannot work because of illness, injury or redundancy, if you choose a redundancy option. You can choose what amount of your income to cover. STIP can be used to cover your mortgage, rent or household bills.

Payment protection insurance is a policy that was sold alongside loans, credit cards or store cards. It was also available as part of the credit linked to catalogue payments. PPI can help cover repayments you owe if you cannot work because of ill health. There is usually a maximum time the policy will pay out of 12 to 24 months.

If you have or have had cancer and you need claim, try to do it as soon as you can. Payments normally start after a waiting time of around 30 days, but it might be much longer.

If your claim is refused, call the Macmillan Support Line for free on 0808 808 0000 to speak to a financial guide. They can talk to you about your options. A claims management company can offer to complain and seek compensation about a refused claim for you. But these companies will take a percentage of any compensation you are awarded.

If you have been diagnosed with cancer and you cannot work, you may be able to claim against your protection insurance.

There is usually a time limit to make a claim, so it is best to do it as soon as you can.

When you make a claim, the insurer will check to see if you are covered for your situation. They may ask for a letter from your doctor, or ask them to fill in a form. Or they may ask for a medical examination to be done.

It can take a while for the policy to pay out. If you make a claim, the insurer will review the situation. Most policies need you to keep paying your monthly premiums while they assess your claim.

With some policies, once you start getting payments, they regularly check to see when you are able to work again. You might need to send evidence showing you still cannot work.

Any money you get can affect your benefits or claiming for future benefits.

Some protection insurance policies offer claims support services. These might cover services like counselling or other health and well-being services.

You can call the Macmillan Support Line for free on 0808 808 0000 and speak to our financial guides about how to make an insurance claim.