Most working professionals will understand that their base salary isn’t the full picture. The modern reality is that professionals also rely on bonuses, commissions and overtime pay to supplement their total income. However, standard income protection policies will only cover your base salary or main source of income, which can leave your additional amounts unprotected in the worst-case scenario. 

So, how can you ensure that your entire income (including add-ons) is protected when you’re unable to work and need time to recover? Morgan Insurance are dedicated to ensuring you get the most out of your policy, and the only way to do that is by breaking down everything you need to know. 

What Does Standard Income Protection Insurance Cover?

Income protection insurance is designed to replace a portion of your income if you’re unable to work due to an unexpected illness or injury. Income protection insurance then provides monthly payments (for a specified period of time), typically up to 70% of your pre-taxable income, to help you meet expenses while you recover. 

It is important to confirm with your insurer what they define as your ‘income’. Most insurers will only cover your base salary as income; however, you may be able to agree on a comprehensive, tailored package, which tends to be more flexible. 

Your Salary Explained:

If your insurer is working up terms that include your income add-ons (i.e. bonus, commission and overtime pay), there may be some questions that help qualify this additional income under your income protection insurance. There are some elements to consider, for example: 

• Bonuses: Are your bonuses guaranteed or discretionary (performance-based)? These will be treated differently as discretionary bonuses are not regular, and cannot, therefore, be considered part of your regular income. 

• Commissions: As commission pay can vary across months, let alone years, insurers will usually look at a 2-3 year average to determine a stable amount that they can use as an estimate. 

• Overtime: They will look at whether your overtime is regular and reliable or on a one-off basis. If evidence can be shown for regular overtime (i.e. through payslips and tax returns), it can be considered as part of your regular income. 

What Evidence Do You Need?

As your additional income isn’t visible through regular payslips, you will need to prove to your insurer that it is a regular income through other methods. They may request evidence or supporting documents, like: 

• Last 2-3 years of tax returns
• Employment contracts that state a bonus structure
• Recent payslips where regular overtime can be identified

To ensure that your income protection insurance reflects your total income and protects you properly if you need to be out of work, you must detail all your regular forms of income and provide evidence to your insurer. 

Why You Need Income Protection Insurance 

This very much depends on your individual circumstances and current financial situation. The truth is, if you rely on your income, particularly additional income, you need income protection insurance. There are several questions you can ask yourself when deciding whether income protection insurance is right for you. For example: 

• Do I have savings or other financial safety nets to cover my expenses?
• What are my monthly living costs (e.g. rent/mortgage, utilities, groceries, debts)?
• Do I have dependents who rely on my income?
• Is this a short-term safety net, or do I need long-term coverage?
• Is my job considered high-risk or physically demanding?
• Does my employer provide any income protection or disability cover?

If you are still unsure, seek advice from a qualified professional who can help you determine the right level of coverage and policy options for your needs. 

How Morgan Insurance Can Help

As market experts, we can compare policies and navigate the market to secure you a policy that works for your lifestyle and protects your income efficiently. We can negotiate favourable terms on your income protection insurance that you won’t find elsewhere. Get the most out of your income protection whilst receiving expert advice from our brokers. 

Not only will we get you covered with a policy that works for you, but we’ll be there to handle the process from start to finish if you need to make a claim. If your income is made up of more than just your base salary, it’s worth protecting it. Contact us today, and we’ll get you started.