Ever thought about what you would do if you suddenly became seriously ill or injured and could no longer go to work and earn a crust? It happens to people more often than you’d think – unfortunately none of us are invincible!
However much you complain about having to go to work Monday – Friday, that precious paycheck allows us to enjoy life outside of the 9 to 5. It allows us to put our favourite meals on the table, keep ourselves safe and warm and if you are lucky, enjoy a few treats here and there. So, what would happen if that was all unexpectedly taken away?
Illness can happen to anyone. Injury and accidents occur every day. A sick day could turn into a sick month or year. It’s not something anyone wants to plan for, but there is a reason why income protection insurance exists!
What is income protection insurance?
Income protection comes under the family of life insurance. Whilst life insurance pays out financially to your loved ones if you pass away, income protection pays out to you whilst you are still here and need it most. It protects your income should you become too ill or injured to go to work, providing regular tax-free income (usually between 30-50% of your salary, you decide when you take out your policy), to help you continue to pay bills, care for yourself and loved ones financially and basically regain a sense of normality during a time where you might feel like everything has been turned upside down.
Sure, you might qualify for Statutory Sick Pay (SSP) from your employer if you become too sick to work. But this might not actually be enough money for you to comfortably live on. Plus, it will only payout for a certain amount of time and there’s no way of knowing how long you’ll be out of action for. What happens when that SSP stops?
If you make a successful claim on your income protection policy and begin receiving regular income, this income will continue to be paid to you until:
- You recover and are able to return to work
- You reach state pension age and retire
- Your policy term comes to an end
- You stop paying your premiums and your policy ends
- You pass away
Basically, whichever comes first. If you get better and return to work, you can keep your policy and claim again as many times as you need to until your policy term ends.
Do I actually need income protection?
No one needs income protection. It’s not compulsory like car insurance is for example. But if you are a working person with financial responsibilities, you should seriously consider income protection.
Of course, there are some instances where you might not need income protection. Perhaps you have just got your first job and you are living at home with your parents. In this case, you probably don’t need income protection. If you lost your income, you would have a place to live and someone to support you until you were able to work again.
If you have rent obligations or more importantly, a mortgage that you are committed to, income protection should definitely be on your radar. Throw a car into the mix, a pet and a family who also rely on your income, and this insurance product becomes all the more important.
The price of income protection varies from policy to policy, and person to person. That being said, you are likely to find a policy that fits your budget, especially if you speak to a specialist broker to help. If you can afford the monthly premiums, income protection provides you with that priceless peace of mind that should the worst happen, you’re covered and protected.