Does Income Protection Insurance Cover Maternity?

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What is income protection?

In a country where statutory sick pay (SSP) doesn’t really offer the type of financial cover most people need while they’re ill or injured and away from work, income protection insurance offers a personal level of cover to ensure your salary (or at least a major part of it) is still available to you while you take time off to recuperate.

After all, you don’t want to be stuck in bed in pain and worrying about covering the monthly bills at the same time.

While many employers offer some sort of improved sick scheme (an expansion of the statutory sick pay) that legally must be adhered to, they are still often short of full cover. Income protection can help plug that gap – especially if you fall ill for an extended period.

Income protection and the self-employed

Where income protection becomes really valuable is for the self-employed. With no external support (including a lack of SSP), the self-employed are particularly vulnerable to illness and injury, and income protection can make sure that they have a buffer in case something unexpected happens to them.

Statutory maternity allowance – what happens when you have a baby?

Just like statutory sick pay, the UK government offer statutory maternity pay (SMP) – and just like SSP, it only really provides for a very minimal level of support.

Currently (2019/20 financial year), SMP is paid as:

• 90% of your average weekly earnings per week for the first six weeks, then;
• £148.68 or 90% of your average per week (whichever is LOWER) for the next 33 weeks.

With a cap of under £150 per week after the sixth week, statutory maternity pay is a significant cut in income for anyone earning more than £7,800 per year!

Does income protection cover maternity leave?

This is the big question– just like with sick pay, can income protection be used to cover the shortfall in maternity allowance?

Unfortunately and in short – no.

Income protection is designed to cover you for an unexpected drop in your income due to illness or injury. Pregnancy, childbirth and the period of caring for your newborn baby in the days that follow are neither considered unexpected (although some might argue otherwise!) nor (correctly) illness.

While income protection provides a perfect answer to being sick or injured, it’s not the answer for improving your statutory maternity pay.

Do you really need income protection insurance? - Where income protection and maternity cross over

If income protection and other loss of earnings insurance cannot improve maternity pay, is it really needed?

If you want to protect yourself from further setbacks due to illness, the answer is - absolutely.

Maternity leave in the UK can be taken at any time around your pregnancy. You might choose to start the 39 weeks of statutory maternity pay a few months into your pregnancy to give yourself the chance to prepare for your new arrival, or you might wait for the baby to be born before taking the time away from work so that you have the maximum amount of time off work to spend with them.

On either side of your maternity leave, however, you are vulnerable. While pregnancy is not an illness, neither is it an immunity to illness or injury. You could become ill quite unrelated to your coming child, and once they are born, you could slip and fall just as typically as before you were a mother.

Simply having a baby doesn’t remove you from the normal goings-on in life, and with a little one to care for, the money your family needs if you did have to take an extended (and unexpected) additional time away from work would still have to come from somewhere.

Both life insurance and income protection become a greater focus once you are providing for a family.

A payment reprieve – income protection suspension

Knowing that your finances are a little more stressed during your maternity pay period, most insurance companies will allow you a suspension of your income protection while you are on leave. This allows you to keep your policy in place but absolves you of having to make regular payments until you are back at work. It’s a useful financial boost and you should check with your insurance provider if you need this additional help.

Choosing not to return to work – income protection post maternity

For some, the change of having a baby precipitates a new outlook on life and they choose not to return to work after the maternity leave, preferring to remain with their baby. With an income protection policy in place that was based on your previous job and salary, however, what happens?

Pleasingly the change-over is simple. Deciding to move from full-time employment to full-time home-maker is seen as little more than a change in career, and financial support for someone who can no longer do their work because they have become ill is the crux of income protection.

You might want to adjust the figures for your income protection, both in terms of the cost of the premium and the amount you’re covered for, but you will be treated with the same respect as an integral homemaker as anyone who chooses to leave the house for work.

Other maternity pay insurance in the UK – is it possible to get pregnancy insurance?

Unfortunately, there is no provision for insuring against growing a family. Having a child is seen as a lifestyle choice in much the same way as going travelling around the world, or choosing to become self-employed might be, and there is no insurance that provides you with an income for doing so.

Pregnancy and childbirth are not illnesses or other unforeseen circumstances that are typically covered with loss-of-income insurance types.

Simply put, maternity insurance doesn’t exist.

However, some permanent health insurance policies are there to help you if there are any complications, specialist needs or other medically related issues that might come up as part of your pregnancy. Health insurance for pregnant women is not a specialised pregnancy insurance in the UK but can help you feel secure and offer specialist care where needed.

Help for those who are self-employed and pregnant

Unfortunately, statutory maternity pay doesn’t extend to the self-employed. If you are planning on taking a break in your self-employed career and starting (or extending) a family, then it is best done by altering your standard practices to take the gap in income into account.

Solutions include employing someone to cover you for maternity leave or prepare by creating a savings account to cover the shortfall in salary.

Income protection with Quick Quote Protect

With experts on life insurance and the best income protection insurance in the UK, at Quick Quote Protect we offer a wide range of products to help you with extra security for the unexpected in life. Give us a call today to speak to one of our experienced and friendly advisors, or fill in our short contact form and we’ll call you back at a convenient time.