Income Protection Insurance

Income Protection Insurance

Income ProtectionWould you still be able to make your mortgage payments if you were off work with a long-term sickness or injury?

Income protection insurance helps you financially if you find yourself unable to work. The most common reasons for people to claim on this insurance are: stress, mental health issues and muscular-skeletal injuries (predominantly back problems). With the average UK employee having enough savings for a little over a month of absence according to insurance company L&G, income protection insurance would be a sensible protection product to have in place. Once an employee’s salary is stopped, income protection insurance will pay out a percentage of their salary until they return back to work and should the employee have to take a pay cut due to their injury, the insurer will pay out a reduced sum each month until the employee retires.

For those without this insurance, you are able to claim Statutory Sick Pay from the government for a maximum of 28 weeks with a weekly payment of under £95.

Do you need income protection insurance then?

It is a myth that this cover is only useful for those who are self-employed or those who have children. If your illness or injury may result in you being unable to make your mortgage payments and pay your other bills, then this insurance will benefit you regardless of your current situation. With a million workers each year finding themselves unable to work due to a serious problem with their health, having this policy in place will provide the certainty that all financial obligations can be maintained, even if you are unable to return to work in the near future, or indeed at all.

How much will this cover cost you?

The earlier on in life that you take an income protection policy out, the cheaper the premium will be in most cases. Your monthly payment will depend on a few things: age, occupation, smoking status and how much money you’d need to receive monthly upon a claim. The deferred period between a claim and when the policy will pay out may also affect the cost of the policy. If you receive no sick pay from an employer, you will need a shorter deferred period, meaning that the cost of the policy is slightly higher than if a longer deferred period is acceptable to you.

Where do you get the ‘right’ policy?

This cover isn’t as simple as choosing a specific lump sum you would like to receive upon a claim. It is crucial to see an adviser about what your options are.

Post courtesy of What Mortgage.