If you have ever asked yourself “Why have income protection insurance?”, you should know that having an income protection policy is an important element of protecting your family’s financial security in the event of something unforeseen happening to you. Here is why…
What is Income Protection Insurance?
To help explain the importance of income protection insurance, let’s start by looking at what this type of insurance is and how it works…
Income protection policies basically protect you/your family against the financial losses likely to occur in the event of an illness or accidental injury rendering you unable to work for any given amount of time.
Paying a monthly benefit representing a percentage (typically not exceeding 60%) of your usual gross income, income protection policies usually start paying out after a pre-determined, so-called deferred period (typically 3 – 4 months after you first became ill/suffered an injury).
Payments usually continue either until you can return to work or at the end of a specified, also pre-determined period.
So, why Have Income Protection Insurance?
Imagine, for a moment, what would happen if your family’s main income – or part thereof – was to be lost due to an injury or illness leaving you unable to carry on working…
Would you, for instance, be able to:
- Continue paying your mortgage, other outstanding debts (credit cards, loans, etc.) and utility bills, as well as paying for food and other necessities?
- Cover any additional expenses incurred as a direct result of your injury/illness (i.e. medical bills, cost of care for you/dependents and/or alternative transport to/from hospital/health centres, schools, shops, and so on)?
- Maintain your current life style without major financial difficulties?
For most families, a significant loss of income would make the answer to any one or all these questions a definite, somewhat troubling “NO!” – which could leave your family facing serious financial problems throughout the duration of your illness/injury.
Having income protection insurance prevents such financial difficulties by replacing at least part of the income you would otherwise lose due to your inability to go to work. Naturally, it is important to set the level of cover high enough to ensure all your family’s needs are met without making premiums unaffordable.
As income protection policies can vary significantly in terms of available cover levels, what is covered (i.e. sickness, injuries and/or redundancy – which, by the way, is not an option with some insurance providers’ policies) and premiums, finding the ideal policy to meet your family’s needs can be an extremely difficult and confusing process.
Offering guidance and advice based on years of experience in recommending suitable income protection policies to individuals from all walks of life, Spectrum FA can help you get the right policy to adequately secure your family’s financial future at the most competitive rates. Call 01279 315 013 now to learn more.