With the cost-of-living crisis squeezing household incomes and many individuals and families having to make tough decisions about what they spend their money on, there is a risk that income protection is seen by many as an unnecessary luxury, rather than arguably the most essential insurance anyone could have.
Income protection is an insurance policy that can provide financial security when you need it most, but only 9% of UK adults carry some form of income protection.
If any of the following five scenarios look familiar, income protection insurance could benefit you.
1. You are self-employed
If you’re self-employed, taking time off work can have a huge impact on your income. The regular income provided by an income protection policy means you can focus on your health, without having to worry about financial security and rushing back to work too soon.
2. Your employer does not provide sick pay
You should review the benefits your employer offers when weighing up the pros and cons of income protection. You should check what your employer’s sick pay policy is and how long it lasts.
If your employer doesn’t offer sick pay, you will usually receive Statutory Sick Pay (SSP) if you need to take time off. SSP pays £99.35 each week in 2022/23 up to a maximum of 28 weeks. You need to consider whether this would be sufficient to meet your expenditure if your income stopped due to illness.
3. Your salary is essential for your family’s finances
If you have dependents, taking steps to ensure financial security if the unexpected happens becomes even more important. Loss of income for even a short period could significantly affect your family’s lifestyle and cause unnecessary stress.
If you are forced to rely on savings, it may also affect your retirement goals and ability to save for the future.
4. Your emergency fund wouldn’t cover your essentials
An emergency fund is money you put aside to cover an unexpected expense or financial shock. This money should be accessible and should ideally cover three to six months of expenditure.
If you were unable to work due to a long-term illness, how long would your emergency fund last?
If your emergency fund wouldn’t be enough to provide peace of mind, income protection could provide the certainty you need.
5. You have no other income sources
You may have a passive income, such as from investments or rental properties, which you can use to maintain your standard of living. However, if your income relies on you being able to work, you should consider how income protection could help.
How much does income protection cost?
· The cost of income protection depends on a number of factors, including your age, the level of cover and your health.
· The cost can vary considerably between insurers. It is important to obtain quotes that are tailored to you and to ensure the cost is within your budget.
If you would like to arrange a no-obligation meeting to discuss your protection needs, please contact us on 0131 260 2760 or at www.mi-plc.co.uk
What UK employees need to know about income protection insurance [online] Available at: https://www.insurancebusinessmag.com/uk/news/breaking-news/what-uk-employees-need-to-know-about-income-protection-insurance-322206.aspx [Accessed 24 November 2022]
5 signs you could benefit from income protection [online] Available at:
https://www.skerritts.co.uk/438/blog/the-news-archive/5-signs-you-could-benefit-from-income-protection [Accessed 24 November 2022]
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Attribution: Nick Youngston