There are many different types of insurance policies we are either recommended or enforced to take out by law.
We do this to take care of the most valuable items we own, including our car and our home. But, we often choose not to protect the source of our wealth - our income.
Unlike your car and home insurance , income protection is not a legal requirement. The reason for this is because, in the eye’s of the law, you would be the only person at risk.
This means we have to change our mindset around insurance - it’s not just about whether it's a legal requirement or not. The law won’t be there to help you secure your personal finance if you find yourself without a job, through no fault of your own.
Although it’s hard to imagine, if you can’t work due to an injury, illness or after an accident, it’s then that we realise the importance of such insurance policies, such as income protection insurance.
So, if disaster strikes, and you’re not able to continue working, it’s important that you still have the means to support yourself and your family throughout your ordeal.
This is where income protectioncan help you.
What is income protection?
Income Protection is a form of cover that provides you with a replacement income if you’re unable to work due to sickness, injury or following an accident. You may be eligible to claim on your income protection insurance if you cannot work due to having:
- a trip or fall resulting in serious injury
- a car accident
- a broken bone or multiple breakages
- anxiety and depression
- cancer or another serious long term illness
- or other ailments that impact your ability to work
So, do I really need income protection insurance?
Many people disregard taking out income protection insurance. This is because they believe they have enough savings in place that if something terrible was to happen, they’d have enough money to cover their monthly expenses.
But, in truth, savings can run dry sooner than you think.
As insurance advisors, we don’t believe enough importance is placed on protecting and maintaining a regular income.
Your main concern when taken ill or following an accident or injury, is, of course, your immediate health. But if you find yourself unable to work, without a steady, comfortable wage, in most cases you will have lost your sole source of income.
Similarly when you’re in a stressful situation such as this, organising your finances can become an additional strain on both your mental and physical health.
Although this may be a worry to you, there are plenty of insurance options out there to help you if you find yourself in a situation such as this. But, as advisors, we do believe that some options are better than others.
For example, a decreasing term critical illness plan aims to clear your mortgage debt in the event of a serious illness. And, although a mortgage repayment is a large proportion of your monthly outgoings, this type of policy doesn’t take into account your other household expenses including, food and other utility bills.
This is why, as Insurance Brokers, we always stress the importance of income protection insurance.
What are the benefits of having income protection insurance?
Instead of just focusing on one element of your monthly outgoings, i.e. your mortgage, income protection insurance helps towards protecting your entire monthly income. This means that in the event of illness or injury, in most cases you can rest assured knowing that you have the funds available to pay off your mortgage, and still have money left over to put food on the table.
By taking steps to secure your income in this way, you are not only ensuring you can protect yourself and your family . In fact, income protection also helps you to safeguard your credit scoreand deposit fundsif you’re on the lookout to buy a house.
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