What income can you insure?
These plans are set up to insure a percentage of your annual income. Normally this is between 50%-65% of your employment income. However, the amounts vary between different insurance companies. Payments are made free of personal income tax.
If you are self employed your employment income is your trading profits for the last tax year. If you are employed, your insurable income is your annual salary plus benefits in kind. If you are a director of a close company, the company take out the plan and insure part of your dividend payments, if these have been paid on a regular basis and company pension contributions.

Deferral period
Plans are set up with a deferred period before payment of any income. Normally this period is 4, 8, 13, 26 and 52 weeks. The deferred period you choose is the period of time during which you consider that you can meet your income needs from other sources such as savings. 

Guaranteed or reviewable premiums?
An income protection insurance plan can also be set up with either guaranteed premiums or reviewable premiums. If the monthly premium is set up as guaranteed then it will not increase during the period of the plan, irrespective of any claims you might have made. If you choose reviewable premiums then these are reviewed by the insurance company, normally every 5 years. They are reviewed on the basis of claims experience in the UK market and not on any claims you might have made.

Level or indexed premiums?
The plan can also be set up to provide either a level monthly income or an increasing income (indexed). If the plan is set up to provide an increasing income this means that the insured monthly income payments will increase each year on the anniversary of the plan either by the Retail Price Index (RPI) or a fixed percentage, usually 5%. Monthly premiums will also increase each year by the index option you have chosen.