Thursday, 17 December 2020

Why You Should Consider An Income Protection Plan

This year has been a steep learning curve for many of us in a myriad of ways, with the effects of the pandemic reaching far and wide. 

One of the biggest impacts here in the UK has been on household income - never before in living memory have we experienced such a sudden and unexpected change in the way that we conduct our working lives, and with so many industries suddenly finding themselves completely out of business for months on end - it's something that will be difficult for many people to recover from. 

But it's not just in times of extreme crisis such as a global pandemic that your income can take an unexpected hit, an estimated one million people per year find themselves suddenly unable to work due to unexpected illness or injury - and though there are government support schemes in place, they can change often whereas a contract with an income protection company will remain the same and can therefore be relied upon more.

As a parent, it goes without saying that our biggest concern in life is with protecting our children's wellbeing. One way that parents do this is, of course, by ensuring that they have adequate life insurance in place to ensure that their families are looked after and provided for should the unthinkable happen.

But did you know that only 4% of self employed workers in the UK have income protection?

Given the impact that a sudden lack of income and ability to work can have on a family, this seems shockingly low. And it's not just families who need to consider this of course, lack of income and ability to pay the rent or mortgage impacts every person regardless of whether they have dependents or not.

Income protection can provide peace of mind, enabling you to choose a policy that fits around your own circumstances and provides the sort of cover you would need to ensure yours and your families comfort and security in difficult circumstances, removing the undue stress and pressure of how you'd be able to manage.

It will usually provide between 50-70% of your income until you recover and go back to work or reach state pension age and it can be taken out whether you're employed or self-employed, full and part time workers, and primary carers - even if you have difficulty proving your income, there are still options available to help.

The cost of Income Protection depends on various factors such as lifestyle, age, job, hobbies, your current health, your medical history and the level of coverage that you’d like. You’ll also need to decide on a ‘deferral period’ which is how long it’ll take between you making the claim and beginning to receive your payout. The longer your deferral period is, the cheaper your premiums will be. 

It would be advisable before buying your policy, to figure out how much Statutory Sick Pay (SSP) you’re eligible for from your current job and work out how long you could get by for with just that pay and/or your savings. Then you can arrange for your insurance payout to start at the point that you think you’d need it most.

Given the shocking year that we've all had, I know that I have certainly started to think about ways to protect my family in the future from the unexpected and taking out income protection will be top of my priority list.

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