How does Coronavirus Impact Income Protection Policies?

  • Sam
  • May 19, 2020
  • Comments Off on How does Coronavirus Impact Income Protection Policies?

Among the many other concerns we all have at the moment with regards to the recent Coronavirus pandemic you may be asking “How does Coronavirus Impact Income Protection Policies?”. With many people furloughed, and others facing an uncertain financial future, it’s only natural that we want to know where we stand when it comes to something like Income Protection…If i don’t have it already, is now a good time to purchase a policy?

So, What Exactly Is Happening?

As people started fearing that they might lose their jobs due to the impact of the coronavirus, enquiries to insurance companies about income cover went through the roof, rising by more than 1000%, and it’s not really surprising.

Income Protection is designed to cover your general living costs if you are unable to work – including your mortgage or rent, and with the uncertainty over whether we would be able to put certain bills on hold, or how long some might be out of work for, it’s no wonder that everyone was keen to know if they could still get cover.

While insurance companies were trying to figure out what they could and couldn’t offer with regards to the virus, for a while, online comparison sites such as Comparethemarket suspended offering quotes on Income Protection altogether.

Despite cover for unemployment still not being available, insurance cover for accident and sickness, including Income Protection Insurance is still being offered – albeit with some restrictions and changes being made by the vast majority of insurers, for example:

  • New applicants being accepted based on their full salary
  • New applications accepted based on their salary, occupation, and annual earnings from March 2020
  • 80% of salary paid if unable to work while receiving reduced earnings
  • Cover based only on furloughed salary
How does Coronavirus Impact Income Protection Policies, More than Money
How does Coronavirus Impact Income Protection Policies

And For Those Who Already HAVE A Policy?

Well those who have existing Income Protection policies are able to make a claim if they have been affected by coronavirus, with four insurers even offering a payment break scheme inline with those offered on mortgages and credit cards. Let’s take a quick look at those companies, and what they’re offering their customers in a bit more detail:

  • LV – Are offering a payment break of up to three months to those who have held their policy for more than a year and have a good payment history. Customers are eligible for this break if they are no more than three months in arrears with their payments, and have seen a significant drop in their earnings, or have lost them altogether. LV standout as being the only insurers who will still allow customers to make a claim against their policy during this payment break period.
  • British Friendly – Policyholders can take a payment break of between 1 and 24 months, but can’t make a claim during that time. The payment break option is open to customers whose policies contain career break options, and who have paid at least one premium.
  • Shepherd’s Friendly – Again, no claims can be made, but policyholders can take a payment break of up to 6 months if their policy has the career break options and they have paid at least one premium.
  • Holloway – Policies can be put on hold for 3 months between April 15th and July 15th for customers who aren’t in arrears and have paid at least 3 months worth of premiums. No claims can be made during the payment break period.

And What About Other Changes That Have Been Made?

There are other insurers who aren’t offering payment breaks, but have made significant changes that will affect policyholders. Such as:

The Exeter was one of the first insurance companies to reveal changes to its Income Protection policies. They stopped accepting claims for self-isolation from March 16th, although before 12pm on that date policyholders could still make a claim. Afterwards customers were told it was no longer part of their terms and conditions.

Vitality Are still accepting new customers for Income protection, providing they didn’t have coronavirus, however, anyone making a claim will now have to wait at least four weeks before their policy will pay out, and anyone who’s applied for a policy and is either showing symptoms of the virus, or undergoing tests, has had their applications postponed.

And Vitality are not the only insurers who lengthened the times that policyholders have to wait before they lodge a claim – in fact 6 other insurers did the same. So, if you don’t already have cover, is it worth getting Income Protection NOW?

Is It Worth Me Getting A Policy Now?

Well depending on how long the pandemic goes on for, any policy you purchase is unlikely to pay out if you are ill in the short-term or are self-isolating. Income Protection policies are designed to cover long absences off work, so you’ll have to wait for it to pay out, by which time you could be out of self-isolation and be back at work – with policies that provide short-term cover no longer available to new applicants.

Basically, to better understand the question “How does Coronavirus Impact Income Protection Policies?”, before you want to take out an Income Protection policy in light of the virus, then you can; there are more than 20 insurers still offering policies, including, other than those I’ve already mentioned, Legal & General, AIG, and Aviva. However, if you’re choosing to do it NOW, make sure you’re aware of if and when it will pay out – as it won’t be immediate. 

Putting the current situation to one side for a moment, I would always recommend that anyone who is employed takes out Income Protection in order to support themselves and their family if they are unable to work – but I wouldn’t let the coronavirus be your overriding motivation.

The government is rolling out measures to help those impacted financially by the pandemic, and these might be more beneficial to you than an Income Protection policy right now. However, as a working adult, it’s always worth purchasing a policy with your future in mind. If you are still asking “How does Coronavirus Impact Income Protection Policies?” then be sure to give me a call to speak with me directly.


I started my career in finance 8 years ago. I’ve gone from advising on insurance in my home county of Kent, to working in the big city of London. I started More Than Money with my Dad and Brother, to get away from the 'sales environment'. When you're a qualified Adviser, the quality of your advice has to come first, not a 'sale on the board'. I thought, if I cant find that environment elsewhere, well I'll create it myself.

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