There are many different types of insurance policies available, and it can be hard to know which insurance policies you actually need.
Income protection insurance is a lesser known insurance. It provides you with a regular income if you are unable to work due to an injury or illness.
Income protection insurance should always be considered in households where there is one breadwinner who brings in the income for the whole family. If you have a mortgage then income protection can offer you peace of mind knowing that your mortgage payments would be covered if you are unable to work.
One of the complex areas of income protection insurance is what constitutes being unable to work. This depends mostly on your job. If you have a physically demanding job, then many injuries will mean that you are unable to work. Whereas a desk job could be adapted depending on your injury.
My job provides sick pay, do I still need income protection?
You should look at what sick pay your employer offers but usually sick pay only covers a short period before you move to statutory sick pay. Statutory sick pay is currently only £109.50 per week and is paid for 28 weeks.
Income protection policies are designed to give you a safety net in case you are unable to work for an extended period of time.
What payments could I get from income protection insurance?
Income protection insurance usually pays you a regular monthly income until you return to work or in some cases until you reach retirement age.
When you take out the policy, you can choose the amount of income you will need to receive each month. You could opt to only receive the amount that covers your essential expenditure so the premiums will be lower. Or you can choose to receive the same amount as your usual income.
It is important that you read the small print of income protection insurance as some policies only pay out for a set number of months which might leave you without income when you are still unable to return to work.
It might be worth paying a slightly higher premium for better cover.
What is an income protection policy deferral period?
A deferral period is the amount of time you can wait before receiving your first income payment. The longer that you set the period as, the cheaper your premiums will be. You need to make sure that you have enough savings to cover your expenses during the deferral period.
Are any medical conditions excluded from income protection?
Different insurance providers cover different illnesses. Pre-existing medical conditions might also be excluded from your cover. It is important to check with the provider before you take out a policy.
Speak to a financial adviser
Income protection insurance is complex and it is important that you pick the right level of cover for your individual needs and that you receive the income for as long as you could need it.
At Four Wealth Management, we offer advice on which protection policy is suitable for your individual circumstances.
Book a no-obligation meeting online now or call us on 0117 973 0500. Meetings can be on zoom or at your home address or one of our offices.
