No one likes to think that something bad will happen to them. But each year close to a million people find themselves unable to work due to a serious illness or injury. If you couldn’t work due to a serious illness, how would you manage? Could you survive on savings, or on sick pay from work? If not, you’ll need some other way to keep paying the bills – and you might want to consider income protection insurance.
What is income protection insurance?
Current Statutory Sick Pay is just £88.45 a week. If you know that you can’t afford to live on this sum, then you need to consider arranging income protection. Income protection insurance is a long-term insurance policy, that will help you if you can’t work because you’re ill or injured. It replaces part of your income and it pays out until you can start working again (or until you retire, die or the end of the policy term), whichever is sooner.
Income protection insurance covers most illnesses that leave you unable to work – either in the short or long term (depending on the type of policy) and you can claim as many times as you need to – while the policy lasts. If you are self-employed or work for a small business it is advisable that you arrange income protection, to ensure that if you are unable to work that you are covered financially.
The first thing that you should do is to speak to a reputable Independent Financial Planner that will help set up the right income protection for you. Once it is set up, should you need to claim, your planner will assist you through the often-complicated steps to handle the claim, and stay with you to assist you throughout the entire process.
Top Tips
- Ensure that your income protection cover runs up to retirement age
- Arrange the minimum deferred period that you can afford
- If your circumstances change, regarding your job or business, if you move, or there are changes to your personal circumstances like a divorce or you have children, review your cover, and contact your Independent Financial Planner, who will review it with you and make any changes necessary
- If you acquire more debt, such as a mortgage, you may also want to adjust your level of cover so all your debt repayments would be covered if you needed to make a claim
- Make sure that you answer all the health questions correctly as the provider will not pay up if information is incorrect or is missing!
- Ensure that you work with an Independent Financial Planner that works with reputable providers who will pay up should the worse happen
- The younger you are when you arrange income protection cover the cheaper it will be, particularly if you run your own business or work for a small business
- Once you start work, you’re never too young to get this in place!
