Now more than ever, people are realising the importance of having income protection. Life insurance providers everywhere have seen a spike in interest and applications in this particular product after coronavirus threatened the jobs and income of many.
No one could have foreseen the pandemic and had you known, would you have taken out income protection? It just goes to show that there’s no use waiting around for something to happen before you take out insurance. Even if you never end up making a claim, it’s the peace of mind that you’re doing all you can to keep you and your family safe.
What is income protection?
If you are sick or injured, income protection allows you to pay your bills and provide for your family by providing regular payments to replace part of your income. Think about it – you’re more likely to be off work sick than you are to pass away before retirement, so in many ways, income protection is the most essential cover out there. Where state benefits can and do change in line with government policy, this cover is a contract and a promise to you that won’t change.
Of course, many people might be eligible to receive sick pay from their employer if they can’t go to work, but this doesn’t apply to everybody and some people might overestimate how much they get. With income protection, you can cover as much of your income as possible or just protect your mortgage/rent payments. It’ll usually provide between 50% and 70% of your salary until you either recover and go back to work, you reach state pension age and retire or you pass away during the period of the claim.
Is income protection expensive?
It depends on your lifestyle, age, hobbies, your current health, and medical history and the level of coverage that you’d like. As with most insurance products, there’s no one-size-fits-all answer in terms of costs. In most cases, you can find a policy premium that works for you by tailoring your cover. You’ll also need to decide on a ‘deferral period’ which is how long it’ll take between you making the claim and beginning to receive your payout. The longer the deferral period, the cheaper the premiums will be.
What about if I am self-employed?
Arguably, income protection is most important for those who are self-employed. With no sick pay to fall back on, how would you pay your bills, run your business, and put food on the table if you couldn’t earn money? You would have to pin your hopes on qualifying for Employment and Support Allowance which is financial support from the government if you’re unable to work due to illness or disability. Although it’s fantastic that the option of that is available, you’ll be provided with much more money if you claim on an income protection policy.
It’s a good idea to factor income protection as part of your business plan so that you and your family can still get by without your income. And there’s no need to worry about being able to prove your income. It can be more challenging but there are plenty of options available. Providers are used to the self-employed, primary carers, part-time workers, and contractors taking out cover and will do what they can to help.
Convinced? If the coronavirus pandemic has taught us anything financially, it’s that having the right cover in place should never be underestimated! It’ll never be a waste of money and it’ll always be worth investing in the financial safety of your family.
Disclosure – this post is sponsored by Lifesearch Insurance.