One of the biggest fears for many people is not being able to pay the mortgage if they were unable to work due to an illness or accident. This is particularly worrying in the current uncertain climate but one of the simplest ways to cover loss of earnings is by taking out income protection insurance In reality, Government benefits won't be enough to cover most people and help them pay bills whilst maintaining their family’s lifestyle.
Income protection, often known as “a rainy day fund “is an insurance policy that pays out a regular tax-free replacement income if you are unable to work because of injury or illness. This enables you to pay your mortgage as well as the daily cost of living. This means you and your family could be safe in the knowledge that you’d be fine financially while you were out of work.
Income protection policies pay out a set amount of income after you have been out of work for a specified two period of time. You pay a monthly premium in return for this valuable protection. Your income protection usually pays out until either you return to work, you retire, the policy expires or death.
Why do I need income protection insurance?
Only a minority of employers support their staff for any length of time if they are unable to work due to illness or accident. Often they only offer SSP (statutory sick pay). Therefore everyone of working age should consider income protection.
I am often surprised by the statistics, but do you know when the public were asked just 9% said they have some form of income protection compared with 41% who have life insurance and 60% have private medical insurance .
The one protection policy every working adult in the UK should consider is the very one most of us do not have is income protection!
Think about how are you will pay your bills if you have a condition that means that you cannot work for a period of time. Consider your financial situation generally Including any savings and investments you might have. If you have a significant sums stashed away you might not need extra cover, but if there is a shortfall income protection is worth considering.
To determine how much income protection would cost and the levels it would pay out you will need to receive a quotation. This can be direct through the insurance provider or through a regulated broker who will look at your circumstances and recommend the best product for your needs.
In my last blog I highlighted the benefits of using a regulated broker. The broker’s advise is invaluable as Income protection insurance is the most likely insurance that you will need advice on how to apply and to claim.
If you would like us to try and save you time and money, email our Head of Insurance, Tracey Taylor BA Hons, Cert CII (FP) for some advice on tracey@thelondoncompanies.co.uk