Benefits of Income Protection

Benefits of Income Protection

What is income protection insurance?

Income protection insurance is a long-term insurance policy to safe guard you if you can no longer work because you’re ill or injured.

  • It replaces part or most of your income – if you cannot work because you become ill or disabled.
  • It pays out until you can start working again – or until you retire, die or the end of the policy term – whichever is sooner.
  • There’s often a waiting period before the payments start – you generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly premiums.
  • It covers most illnesses and accidents that leave you unable to work – either in the short or long term (depending on the type of policy and its definition of incapacity).
  • You can claim as many times as you need to – while the policy lasts.

Do you need it?

  • According to the ABI, in the UK alone one million workers a year find themselves unable to work due to a serious illness or injury.
  • It doesn’t matter whether or not you have children or other dependants – if illness would mean you couldn’t pay the bills, you should consider income protection insurance.
  • You’re most likely to need it if you’re self-employed or employed and you don’t have long-term sick pay to fall back on.
  • Check what your employer will provide for you if you’re off sick with a serious illness.

Who doesn’t need it?

You might not need income protection insurance if:

  • You could survive on government benefits – but they might not be enough to cover all your outgoings.
  • You have enough savings to support yourself – remember that your savings might need to see you through a long period of time.
  • You could take early retirement – if you’re near retirement age, perhaps you could afford to retire early. If you’re unable to return to work you might be entitled to take your pension early.
  • Your partner or family would support you – perhaps your partner has enough income to cover everything the two of you need.

Please note this article is for information purposes only.