What is Income Protection Insurance?
It’s estimated that as many as one million people in the UK cannot work each year due to serious illness or injury. If that happened to you, how would you manage? Would your sick pay be sufficient, or your savings?
Even if you don’t have any dependents, it’s worth considering income protection insurance if you’d struggle to pay your bills, particularly if you’re self-employed. It will replace part of your income until you can return to work, retire or the policy ends.
Different types of income protection cover:
Short term – also known as Accident, Sickness and Unemployment (ASU) policies, they can include Payment Protection Insurance (PPI) and Mortgage Payment Protection Insurance (MPPI) and usually pay out for one or two years. Some policies do not cover a specific debt but will fund your lifestyle should you lose your income.
Long term – these policies usually provide a regular income until you’re well enough to return to work or up to the end of the policy term. However they do not cover you if become unemployed or are made redundant, unlike most short-term policies. There are different types of long-term plans and it’s vital to get one that suits your circumstances. Prima Protect can advise on this.
Do you really need income protection?
It’s obviously not worth paying for cover you don’t need, so first check whether:
- You have an employee benefits package providing an income for 12 months or more
- You could manage on government benefits or have enough savings, but remember those savings may have to last you a long time
- You are entitled to take early retirement, and your pension, early
- Your family or partner could support you
How much does income protection cost?
This will depend on a number of factors such as your age, employment and how much monthly income you’d like to cover.
Prima Protect will advise you how to best protect your income in the event of accident, sickness or illness.