Do I Need Income Protection?
Many of our clients come to us with the question “Do I need Income Protection?” To answer this question, it is perhaps best to explore what this kind of insurance policy is and what it covers.
What is Income Protection Insurance?
Income protection policies are long-term insurance policies designed to protect you in case you should become unable to work due to an injury or illness. Ensuring you continue to have a regular income while you are unable to work due to an illness or debilitating injury, such a policy will replace part of your income until you either recover sufficiently to return to work, retire or die or until the end of the policy’s term (this is generally a matter of whichever comes sooner).
Covering most illnesses/injuries likely to leave you incapable of working in the long or short term (this depends on the type of policy selected and the insurance provider’s definition of what constitutes ‘incapacity’), these policies may be claimed on as many times as necessary throughout a policy’s term.
Most policies also have a waiting period before pay-outs commence, and payments are usually set to start as soon as sick pay and/or cover by other types of insurance end. For obvious reasons, the longer the waiting period before commencement of payments, the lower premiums will be.
It should be noted that these policies should not be confused with short-term (typically lasting two to five years) income protection – which may cover fewer situations/illness and only pays a monthly sum for a limited, predetermined length of time – or critical illness insurance, which provides a lump sum upon diagnosis of a specified serious (critical) illness.
Do I Need Income Protection?
To answer this question, you should consider the following:
- Does your/your family’s current lifestyle rely heavily on your income?
- Would being unable to work leave you unable to pay your mortgage, utility bills or outstanding debts (loans, credit cards, etc.)?
- Do you have dependents/children whose financial security could be at risk if you were unable to work?
If the answer to all or any of these questions is ‘yes’ and a serious illness or injury would leave you unable to meet your monthly financial commitments, you should seriously consider getting income protection – regardless of whether you have children/other dependents or not.
This is especially important if you are self-employed or in employment where no sick pay to rely on is available (you should check with your employer whether they can provide for you – and how – if you cannot work because of an illness or injury).
Getting the Right Policy
As with other types of insurance, comparing policies carefully is imperative to get the right cover to meet your/your family’s specific needs. With years of experience in helping people like you get the correct cover to meet their needs, we can assist you in finding the right income protection policy to protect you and your family. If you believe you may require income protection, please get in touch.
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