During uncertain times you need to know that you have done all you can to protect not only your family and surroundings but you income and earnings. At the moment this is more prevalent than ever as no one saw what was coming and hindsight is a good thing. We can learn for the future though and prepare for anything like this if it should ever happen again.
Did you know that if you’re sick or injured, Income Protection will enable you to pay your bills and provide for you and your loved ones. Where state benefits can and do change inline with government policy, this cover is a contract and a promise to you that won’t change.
Not everyone receives sick pay from an employee and some are not even covered at all, others underestimate just how much income they will receive. Protection can provide that financial safety net. You can choose a policy built around your own circumstances and can cover as much of your income as possible. The option to just protect your mortgage or rent repayments is available too as that is usually the main responsibility of an income.
According to the ABI (Association of British Insurers) one million workers a year find themselves unable to work due to a serious injury or illness. Income Protection is there to pay out in case something happens to you and you’re unable to bring home the bacon. It’ll usually provide between 50% and 70% of your salary until 1 of 3 things happen; you recover and go back to work, you reach state pension age and retire, or you pass away during the period of the claim.
Obviously Income Protection would depend on factors including lifestyle, age, current health, 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. Before buying your policy, you should 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. At this point you then arrange your insurance payout to start at the point that you think you’d need it.
Income Protection for the self-employed
Right now there is a lot of uncertainty about what is going to happen with those who are self-employed. How, if you are the main household earner, do you manage to pay bills, put food on the table, run the household etc if you are unable to work anymore. Arguably, if you’re self-employed then you probably need income protection more than anyone.
If you are self employed there is no sick pay, no maternity leave and no pension. In this case Income Protection is designed to replace your income if you were to become seriously ill or injured. It is usually pays a percentage of your normal salary – usually between 50% and 70% – and the cost of a policy depends on your age, job, your health and lifestyle and the percentage of income you’d like to cover. When taking out Income Protection, you’ll agree to the range of illnesses and injuries covered – typically including heart disease, back issues, cancer and more – along with the ‘deferral’ period.
When self-employed, Income Protection should be factored in as part of your business plan so that you and your family can still get by without your income. When self-employed and taking out an Income Protection policy, your monthly income is based on your share of the pre-tax profits generated by your business. The amount of cover that you’ll need depends on the size of your mortgage and whether you have taken out any loans to build up the business.
Income Protection is available to self-employed, primary carers, part-time workers, contractors and more. Even if you have some difficulty proving your income, there are plenty of options available. This is not dependent upon whether you have family or children either so good to know for those who are single and relying on a sole income.
I know this gives me a lot more peace of mind and I really do wish I had had something like this set up long before now. Although the current situation in the world has made things seem very fragile and we are all to muddle through together, in the future it is good to know that systems like this are in place and I know for sure I will be taking advantage.
