Income Protection Insurance... - The Business Protection Company
Find out how you can pay less for your income protection insurance cover… Income Protection Insurance gives you peace of mind that should you be unable to work, that you can still be able to afford your current living expenses. Please see below where we explain everything that you need to know about Income Protection Insurance Cover, before buying Income Protection Insurance. What is Income Protection Insurance Cover? Income Insurance provides you with cover or protection should you lose your income through an accident, sickness, or unemployment. Insuring or Protecting your income can give you peace of mind that you will always have enough money to live on should you be unable to work. Income protection insurance works by paying you a regular sum for a set period of time after you place a claim. It is often paid as a lump sum each month instead of being tied to a particular debt such as your mortgage. Who is suitable for Income Protection Insurance Cover? Income Protection Insurance is not essential for all or something that every working person must commit to, and there’s no obligation to buy it at any particular point in your life. However an income protection insurance policy could prove invaluable if you fall ill, have an accident that leaves you incapacitates, or should you face redundancy or unemployment. If nothing else, income insurance would provide you and your family with the security of knowing that if the worst was to happened, that you would still have some money coming in to cover your day to day living costs. This is particularly useful if you have little in the way of savings or another source of household income to fall back on. E.G. If you’re an employee and become ill or have an accident that prevents you from working for at least four days in a row, you would be entitled to up to 28 weeks of statutory sick pay if your employer doesn’t have a sick leave payment scheme of their own in place (your work contract should set out what you are entitled to). This means that you are guaranteed to have a source of income for a few months after becoming ill, but if you are still unable to work after that point, you would have to turn to state benefits. However, it’s worth noting that at just £87.55 a week, statutory sick pay is unlikely to be enough to cover your basic living expenses. Likewise if you lose your job through redundancy you may be entitled to statutory redundancy pay for a limited time, but this wouldn’t usually be enough to replace your income completely and would not help if your unemployment was not due to redundancy. This kind of temporary pay carries no guarantee that it will tide you over until you find another job, which leaves you at the risk of having to severely cut down your life style and reduce the amount that you can spend – and could lead to you having to default on your mortgage payments which would could put your home at risk. Although there are several benefits you may be able to claim if you were unable to earn your own income, existing on these alone is unlikely to bring in enough money for you to maintain your current lifestyle. This is where income protection insurance comes in. It would aim to continue you on the same financial level that you enjoyed, while you were in work. If you are trying to cut costs income protection insurance cover may seem like an unnecessary extra, but if you shop around for a decent income protection insurance policy that provides you with the income protection cover you need at a price that you can afford, then it can be worthwhile having the back-up in place. Having some kind of income protection insurance cover in place can be particularly valuable if you are self-employed, because you will be less likely to be able to cover the cost of living if you fall ill and can no longer work. This is because you would not be in receipt of any statutory sick pay and would not be part of any employee-related insurance schemes. In this case a regular payout from your salary insurance policy or income protection insurance cover would help to replace any of the money that you previously would have earned through self-employment. What should I look for in Income Protection Insurance Cover? The maximum amount that you would be able to claim through an Income Protection Insurance policy is usually an amount equivalent to the salary that you were earning after tax, minus the benefits that you would now be able to claim, although this does vary from provider to provider. When you take out an income protection insurance policy you should be able to specify how much cover you need a month, at an amount that is generally up to 70% of your income. Therefore so would need to think about how much cover you would need to actually cover your living expenses, if you were no longer earning a salary. Once you make a claim your loss of income insurance cover will continue to pay out until the date that you have selected for your cover to end, or the date that you return to work if this is sooner. Many income insurance policies limit their maximum claim period to 1 or 2 years whilst other, often more expensive income protection insurance policies, will offer to pay out indefinitely if you are unable to return to work for a sustained period, usually for accident and sickness insurance policies only. Again, you would need to balance the income reassurance that you would require along with the affordability of the premiums, when choosing an income protection insurance policy. There would also be a waiting period between when you first place a claim and when the policy will start paying out, of usually