Income protection cover could provide a lifeline if you’re unable to work through illness or an accident, but many people don’t realise they need it until it’s too late.
When you stop and think about it, protecting our income should be a priority. If you’re self-employed or run a small business, it’s particularly important. But for employees too, income protection could prove vital, especially if your employer offers nothing more than statutory sick pay.
Despite this, many people shy away from taking out any form of income protection insurance. Perhaps this is because of the cost or maybe because they just don’t think they need it.
A million people in the UK are unable to work due to an accident or ill health each year. While we all aim to stay safe and well, we should prepare for the possibility of things not going to plan. Protecting the income we rely on to provide for our daily needs, and the needs of our loved ones, should be a priority.
Here are five reasons why income protection could be an important insurance to consider.
For most of us, our salary pays for our homes, our bills and the food we put on our table. On top of these daily essentials, it may also fund much-needed holidays and precious family outings, as well as providing for our future aspirations – including our retirement.
Taking out income protection cover – whether it’s Personal Accident Insurance or Long Term Income Protection – will ensure you continue to receive an income if you’re unable to work. This is particularly important if you own a business or are self-employed, but it can provide employees with a lifeline too. In the event of illness, many workers will only receive statutory sick pay (currently £96.35 a week for up to 28 weeks).
It’s not something most of us want to think about, but the reality is that we all face the risk of getting ill or having an accident. The LV Risk Reality Calculator assesses the chances of you becoming too incapacitated to work or dying before your retirement age. This can be a wake-up call for many people.
While it may be uncomfortable to discuss, it’s important to face the fact that you never know what lies ahead. The key is to take preventative action early on by taking out cover against the unknown. Many people feel a great sense of relief knowing they have taken steps to protect themselves and their families.
You may already have various insurance policies in place. However, unless you have taken out the right kind of income protection insurance, you won’t be covered for loss of earnings if you are incapacitated and unable to work.
Many people confuse Critical Illness and Long Term Income Protection but these covers are not the same. Critical illness cover pays out a lump sum if you are diagnosed with one of a number of specified serious illnesses, including cancer, stroke or dementia. However, it only provides cover for certain conditions and, unlike Long Term Income Protection, this does not include mental illnesses. Crucially, it will not provide you with an ongoing income.
Your circumstances are unique to you. With growing numbers of people becoming self-employed and choosing to run their own businesses, it’s more important than ever that the insurance sector offers a good range of income protection products.
Your employer may provide benefits, such as Death in Service (life cover) or Group Critical Illness cover. All of this will help determine what you need and which income protection cover is the best fit for you.
When considering income protection, the two main options are Personal Accident Insurance and Long Term Income Protection. In addition to a lump sum being paid to your family if you die as a result of your injuries, benefits of Personal Accident Insurance include regular payments if you’re off work, recovering from an accident.
Long Term Income Protection (sometimes called Permanent Health Insurance) is a more comprehensive option for people looking for cover in the event of being unable to work. It’s designed to provide you with an income over the long term, if you can’t work because of an illness or disability.
Our team of insurance experts will talk through your personal circumstances so we can identify which cover is right for you.
Cost is the reason why many people avoid taking out income protection insurance. However, it may not be as expensive as you think.
The price for your cover will depend on your individual circumstances. For example, if your spouse or partner is the bigger earner, you may not need as much cover as if you are the main breadwinner.
Our advisors will carefully review your needs and situation to find the best value cover for you.
A note of caution: there are some insurance products on the market which do not provide adequate income protection cover. Remember, cheap does not always mean good value. Our specialist advisors will only recommend high quality cover that truly reflects your needs.
Whatever your circumstances, get in touch to find out what income protection cover you need to give yourself and your family peace of mind.