Why is income protection a low priority?
We insure our phones, cars, washing machines, home contents and pets… but why not the income that supports them all?
Income protection is an invaluable source of income if you are unable to work due to long term illness, accident or disability. A policy will typically pay out a monthly income until you are able to work again, or until you retire. The payments will usually begin after 3-6 months off work, depending on what options you chose when you set up the insurance.
Surprisingly, only about 1 in 10 of us has this type of cover in place. This can leave us and our families vulnerable to severe financial difficulties should we be unable to work for a prolonged period, for any reason.
Claims statistics show you are four times more likely to suffer a critical illness than die before the age of 65
Unfortunately, statistics show that 1 in 6 of us could suffer a critical illness before retirement age. Advances in medical science means that many patients return to good health, which is great news. But most of those will not have any sort of cover in place to protect their income during the period of illness.
But it’s expensive… and don’t State Benefits cover me?
If you lose a mobile phone its highly inconvenient. If your washing breaks down it can stretch your finances to replace it. But consider the impact of being unable to work and provide an income for you and your family for a prolonged period, and the money spent on insuring those smaller things seems a poor investment by comparison. When you look at the typical annual premium compared to the typical payout across those insurance products, a mobile phone loss may pay out a poor 3 times the annual premium. This compares to over 100 times the annual premium paid out by an income protection policy.
The amount of support from the Government is unlikely to be much more than £420 per month. Not enough to cover the mortgage or rent, utility bills, food, clothing, car maintenance and other goods required by most UK families.
So next time you pay out your monthly premiums for your household goods, phone, holidays and pets, consider whether some of your money may be wisely spent on protecting the income that pays for them all. If you’d like to know more about income protection and critical illness insurances, speak to your Advisor.
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