Income Protection Insurance
From the cost to what it covers, here’s what you need to know about income protection insurance.
For any working professional, income protection insurance is essential. Yet, what is it?
In the event that an illness or injury prevents you from working, income protection insurance has been created to help you supplement your income. For a little monthly or yearly premium, your income protection provider will give you the assurance that, should you suffer from a long-term critical illness or become injured, you won’t have to worry about how you’re going to pay for your daily expenses.
Would you be interested in purchasing an income protection policy? Learn a little bit more about how it might be a wise decision for you.
Income protection insurance supplements your salary and is one of the best options for working parents, especially the breadwinners.
Typically, monthly payouts from income protection insurance are made. When you are unable to work, you will typically receive about 70–75 percent of your salary. Your financial security will be provided by income protection insurance, allowing you to focus on getting better.
There are many things that life can throw our way, from mishaps and wounds to serious and crippling illnesses. You get the much-needed piece of mind from income protection insurance. It enables you to live more fully and spend less time contemplating potential outcomes.
Do I Need Income Protection Insurance?
Before taking out income protection insurance, you’ll need to assess your personal circumstances. It isn’t always essential. Income protection insurance could be important if any of the below circumstances apply:
- Self-employed or small business owners. Self-employed people are generally not entitled to sick pay or annual leave. As all days off go unpaid, a self-employed person would usually benefit from income protection insurance.
- People with dependents. Whether it’s your kids, your parents or a disabled dependent, if you have someone in your life that relies on the income you earn, income protection insurance will offer comfort that you will be able to provide for them no matter what.
- People with financial obligations. If you have any debts, such as a mortgage, that you’ll need to continue to pay even if you’re unable to work, income protection insurance could be your saviour.
How Much Income Protection Insurance Do I Need?
To calculate how much income protection you need, start by preparing a budget. This will help you to understand your monthly outgoings and work out the income you’ll need to replace. You may also want to factor in making payments to your income protection insurance provider as well.
Here’s a few things to remember to factor into your budget:
- Mortgage repayments or rental costs
- Car finance, insurance and other running costs
- Utility bills
- Food and any other financial responsibilities such as childcare, etc
How much income protection insurance you’ll need is entirely dependent on your personal circumstances.
Income Protection Insurance For Doctors
Due to the substantial incomes earned by most doctors, purchasing income protection insurance is a necessity. Imagine receiving a serious sickness or degenerative disease diagnosis that prevents you from working for the foreseeable future. Also, an unforeseen accident can prevent you from fulfilling your duties at work. Without your income, could your family maintain its financial stability?
Income Protection Insurance For Contractors
Often, contractors are not entitled to employment benefits like sick leave and vacation time. Income protection insurance might be the best safety net in light of this. No matter what the future holds, protect your income and make sure that you and your family can maintain a stable financial situation.
Income Protection Insurance For Self-Employed
The fact that every day off is entirely unpaid is one of the biggest drawbacks of self-employment. Consider yourself in the situation of being unable to work for an extended length of time. Then what? Well, income protection insurance can help in this situation. For the period of your recuperation, it can provide a monthly payment of up to 75% of your disclosed wages. Give yourself the assurance that your living expenses will be met in whatever situation.
How Much Does Income Protection Insurance Cost
The cost of income protection insurance depends on your personal circumstances along with the level of cover required. Typically you can expect to pay somewhere between £10 and £80 per month. A number of factors will impact the price of your income protection insurance policy. These include:
- As a general rule, the older you are the more expensive your income protection insurance policy is likely to be.
- Overall health. Your medical history will also impact your income protection insurance policy fees. If you have already been diagnosed with an underlying health issue, your policy is likely to be much pricier if available at all.
- Lifestyle in general. Whether you smoke or not, how much you drink on a weekly basis and how active you are will all impact the overall cost of your income protection insurance policy.
Other things that will impact the cost of an income protection insurance policy include the length of the policy and the level of cover. The longer you want a policy to last will ultimately impact the price. As will the level of cover you require, i.e. how much you’ll need the policy to pay out.
Income protection insurance can be taken out in two different ways. It can be purchased alongside a life insurance policy (or added on to an existing policy); or it can be bought separately. The way you choose to purchase your policy is down to personal preference.
Do you want to pay two monthly premiums or one? And is your life insurance provider as competitively priced with their income protection insurance? Those are just two things to think about in the battle of adding it on vs. taking out a separate policy.
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