No one likes to think about the bad things that can happen to us, but if you stop and think about it, you probably do know of someone who has had a life-changing accident or a long-term illness. It’s a hard fact of life, not something we need to dwell on but wise to be prepared and financially protected against every possible eventuality. This is why Income Protection is one type of insurance that we should all think about having.
Income Protection is an insurance that should be considered alongside other types of life protection. Life Assurance is there to pay out a lump sum to your family if you die, Critical Illness Cover can give financial stability if you are diagnosed with a specific life-affecting illness. But the best way to approach this is to think about the level of risk surrounding each possible eventuality. For example, is there a chance that you could be hit by a bus and die tomorrow? Yes there is a chance, but the chances of being injured in an accident or diagnosed with a serious illness are higher. The right thing to do is to protect yourself against all of these scenarios but, that can get very expensive, so you may need to pick and choose the level of cover you can afford based on a reasoned assessment of potential risks versus level of severity.
What is Income Protection?
In a nutshell, if something happens to you that causes you to be unable to work for a long period of time, an income protection policy will pay you a monthly payment to cover large proportion of your salary.
Of course, it’s never quite that straight forward. There are several factors to consider when choosing Income Protection. Here we’ve covered a few of the questions we hear most frequently.
How long do I have to be off work before it will start paying out?
This is entirely dependent on your level of cover. As a general rule, we would recommend that you choose a policy that will kick in three months from when your income stops. However, you can make this period longer or shorter depending on your personal preference and affordability.
Is Income Protection limited to specific illnesses or injuries?
No. Unlike Critical Illness Cover which only covers a specified list of illnesses and injuries, Income Protection is protecting your income so it will pay out for any illness or injury. It’s important to note that Income Protection does not cover unemployment due to redundancy.
Will my age affect the cost of my Income Protection?
Your age will be a factor when taking out an Income Protection policy as the older you are, the greater the risk that you will need to take time of work due to illness. This is why we always recommend that you take out this type of cover as young as possible, when it will cost you the least.
Can I get Income Protection if I’m self-employed?
Yes! And if you’re self-employed, Income Protection may be even more important for you as you may not be entitled to sick pay. Insurers will be able to look at your recent self-employed income in order to calculate how much they will cover.
Ask a professional
Insurance can be complicated. It’s so important to get it right. You need to know that you and your family are covered financially should something awful happen. And if something awful does happen, imagine the relief at knowing that at least you don’t need to also worry about money!
To get your insurance right, enlist the services of an expert insurance broker. Find one that is recommended by a friend or family member or that you can see has excellent reviews online. Make sure they take plenty of time to talk you through all the options available. Build a range of cover that is affordable but that gives enough protection based on the highest risk scenarios and then go to bed at night knowing that you and your family are financially protected.
At Hudson Rose we believe passionately that everyone should have the right cover in place to protect them financially if life takes an unexpected turn. We pride ourselves on giving expert impartial advice that is fully tailored to the individual needs of our clients. If you’d like to talk to us about your insurance cover, give us a call on 0330 122 9920 or book an appointment using our online calendar and lets get the ball rolling!
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