Income protection insurance is an insurance that covers you in the event that you find yourself unable to work for any reason. Like other forms of insurance, you are required to make a monthly payment to protect your income. These are arranged privately by the individual and are calculated to pay enough to the policy holder should they find themselves indisposed.
Now more than ever as we face a cost of living crisis, it is important to evaluate every aspect of your finances and ensure that all eventualities are covered so that, should you find yourself incapacitated, you are still able to pay the bills.
WHAT DOES INCOME PROTECTION INSURANCE COVER?
In the unfortunate, and unforeseen, event that you find yourself unable to work, income protection will pay you a monthly income that will allow you to pay your bills. But what reasons might you be unable to work?
Essentially, it is anything that leaves you unable to do your job. This may be a broken leg if your job involves driving for example. The insurer that you choose will have a definition of incapacity it is worth checking out what is and what isn’t covered first.
WHY IS INCOME PROTECTION SO IMPORTANT
If anything should happen to you and you are unable to carry out your job, how will you manage to provide for you and your family? The mortgage/rent will still need to be paid and the bills will still need taking care of. Your income may go down but your outgoings are unlikely to.
If you are employed, you may get statutory sick pay if you have to take time off or you may have health cover provided through your work. If you are self-employed, it is up to you to ensure that you can cover your bills if you are unable to work due to illness or accident.
HOW MUCH DOES IT COST?
The amount you will pay for income protection depends on the size of the income that you are wishing to protect and how much of that income you wish to receive should anything happen to you.
REDUNDANCY
Income protection insurance does not cover redundancy it only covers mental and physical illness that leaves you unable to do your job.
THE RISKS OF NOT HAVING COVER
You may find yourself unable to work for a year or more. If you have little savings and no other income, you then face the prospect of having no way to pay the bills. This could lead you to lose your home or to face mounting debts. Insurance means that you are covered (after the waiting period) for the fixed time agreed in your policy or until you are well enough to return to work.
I am an Independent Financial and Mortgage Adviser and have worked in Financial Services for over 12 years. During my career I gained experience in assisting both individual and corporate clients.…
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