Do You Need Income Protection Insurance?
If you are unable to work due to a serious illness or accident, you may need to find a way to financially support you and your family for a long period of time. Income protection insurance could be the solution. Here’s how it can help.
What does income protection insurance cover?
This is an insurance policy that will cover the majority of illnesses that leave you unable to continue work. If you cannot work due to a serious heart condition, or a stress-related illness, income protection insurance could provide cover. It will not pay out if you are made redundant through traditional means. Instead, it will only help if you cannot work due to injury or illness.
How much does income protection insurance cost?
As with most insurance policies, a number of individual factors determine the premiums for income protection insurance. These include factors such as your age, job type, health, percentage of income you wish to cover and how long you want the policy to last. Insurance policies have restrictions on the total amount you can be covered and claim for based on a percentage of your income.
Income protection policies can either be for a fixed period of time or until you reach retirement age.
Most policies dictate a set time period before any money can be paid out to claimants. This will be linked to your policy premiums. This means the less you pay, the longer you may have to wait before any claims can be made.
How to determine if income protection insurance is for you
Before taking up a policy, you may wish to think about the following:
- If you fall ill, is there anyone else who can pay all the bills?
- Do you have sick pay available and how long does this cover?
- For anyone self-employed, how will the bills be paid if you are seriously ill or injured?
- Can you afford the level of cover you need? The set premiums should be at a level you can afford alongside your regular bills. But the policy should also cover your bills if you make a claim.
Whether you have any children or not, if an injury or illness stops you from paying the bills, serious consideration should be given to income protection insurance.
How much cover will you need?
Most insurance companies allow you to set an amount, or choose a percentage of your current annual salary. The best way to work this out is to write a budget which details all of your regular outgoings.
Remember, the higher the amount or percentage, the higher the premiums you will have to pay. Make sure you can afford this on a monthly basis before making any commitments.
What terms should you choose?
You can choose from two types of policy terms:
- Short-term
Income is paid to you for a fixed short-term period.
- Long-term
You are paid income for as long as the policy dictates. In most cases this is up to retirement age, or a set period such as 40 years.
It is usually cheaper to opt for a short-term policy as the insurer will only be required to pay out for a smaller period. However, bear in mind that a short-term policy may not provide enough cover should you be off work for an extended period of time.
Are you considering income protection insurance?
If you are thinking about taking out income protection insurance consider talking to your local Mortgage & Protection Adviser. If you enjoyed reading our article we offer high-quality mortgage & protection advice for income protection insurance out of Colchester, Essex. You can get in contact with us today by calling 033 3303 4230 or e-mail [email protected].
There are other providers of Payment Protection Insurance [Short-Term Income Protection] and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk.
FINANCIAL PROTECTION POLICIES TYPICALLY HAVE NO CASH IN VALUE AT ANY TIME AND COVER WILL CEASE AT THE END OF THE TERM. IF PREMIUMS STOP, THEN COVER WILL LAPSE.
If you are unable to work due to a serious illness or accident, you may need to find a way to financially support you and your family for a long period of time. Income protection insurance could be the solution. Here’s how it can help.
What does income protection insurance cover?
This is an insurance policy that will cover the majority of illnesses that leave you unable to continue work. If you cannot work due to a serious heart condition, or a stress-related illness, income protection insurance could provide cover. It will not pay out if you are made redundant through traditional means. Instead, it will only help if you cannot work due to injury or illness.
How much does income protection insurance cost?
As with most insurance policies, a number of individual factors determine the premiums for income protection insurance. These include factors such as your age, job type, health, percentage of income you wish to cover and how long you want the policy to last. Insurance policies have restrictions on the total amount you can be covered and claim for based on a percentage of your income.
Income protection policies can either be for a fixed period of time or until you reach retirement age.
Most policies dictate a set time period before any money can be paid out to claimants. This will be linked to your policy premiums. This means the less you pay, the longer you may have to wait before any claims can be made.
How to determine if income protection insurance is for you
Before taking up a policy, you may wish to think about the following:
- If you fall ill, is there anyone else who can pay all the bills?
- Do you have sick pay available and how long does this cover?
- For anyone self-employed, how will the bills be paid if you are seriously ill or injured?
- Can you afford the level of cover you need? The set premiums should be at a level you can afford alongside your regular bills. But the policy should also cover your bills if you make a claim.
Whether you have any children or not, if an injury or illness stops you from paying the bills, serious consideration should be given to income protection insurance.
How much cover will you need?
Most insurance companies allow you to set an amount, or choose a percentage of your current annual salary. The best way to work this out is to write a budget which details all of your regular outgoings.
Remember, the higher the amount or percentage, the higher the premiums you will have to pay. Make sure you can afford this on a monthly basis before making any commitments.
What terms should you choose?
You can choose from two types of policy terms:
- Short-term
Income is paid to you for a fixed short-term period.
- Long-term
You are paid income for as long as the policy dictates. In most cases this is up to retirement age, or a set period such as 40 years.
It is usually cheaper to opt for a short-term policy as the insurer will only be required to pay out for a smaller period. However, bear in mind that a short-term policy may not provide enough cover should you be off work for an extended period of time.
Are you considering income protection insurance?
If you are thinking about taking out income protection insurance consider talking to your local Mortgage & Protection Adviser. If you enjoyed reading our article we offer high-quality mortgage & protection advice for income protection insurance out of Colchester, Essex. You can get in contact with us today by calling 033 3303 4230 or e-mail [email protected].
There are other providers of Payment Protection Insurance [Short-Term Income Protection] and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk.
FINANCIAL PROTECTION POLICIES TYPICALLY HAVE NO CASH IN VALUE AT ANY TIME AND COVER WILL CEASE AT THE END OF THE TERM. IF PREMIUMS STOP, THEN COVER WILL LAPSE.
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