If your family depends on one income, it can be daunting to think about what would happen if that income no longer existed.
Imagine you are no longer able to work; perhaps you suffered an injury, an illness, or became unemployed. Would your family cope without your monthly financial contributions? We all have serious commitments, from mortgage payments to loan and debt repayments, amongst an array of other essential things to pay for including food, utility bills and transportation.
The breadwinner provides crucial financial stability to dependants, and it is worth considering a plan of action if this safety net was to be pulled from underneath your family.
What is income protection insurance?
Income protection insurance is an insurance policy which helps to replace part of your income if you are unable to work because of an illness or injury. You will continue to receive financial aid from your insurance either until the policy ends, you are back to work, you retire, or you die.
Do I need income protection insurance?
If you don’t have access to sick pay with your employment, having income protection insurance to fall back on could be vital. Also, if you are self-employed, this type of policy could be the perfect cover option to assist in any sick days you need to take.
What are the benefits of income protection insurance?
Income protection insurance could be a lifeline for you and your family if you are suddenly unable to work. A big benefit of this type of policy is that it will give you and your dependants pay outs until you are able to start work again, or until the policy ends. This gives you more time to recover and less stress in the process. Income protection policies also cover most illnesses that would deem you unfit for work. This means you don’t have to worry about specific sicknesses not being covered. Also, you can expect your insurance pay outs to be tax-free so you can receive the most money possible. Finally, with an income protection policy, you can claim numerous times within your policy’s time frame. If you happen to be too sick to work twice in a year, you can still be covered both times, as long as your policy is still valid.
How much does income protection insurance cost?
The cost of income protection insurance depends on your personal situation, and there are key factors which will determine how much you pay. These include your age, if you are (or were) a smoker, how much cover you would need, your health and the types of illnesses and injuries covered in your policy. If your job is considered more high risk or dangerous, such as working in construction or with a lot of manual work and heavy lifting, your policy will likely be more expensive than someone’s who works in an office or a shop. Also, if you have any pre-existing medical conditions, you could end up paying more per month than someone with a healthy background.
How can I get income protection insurance?
The best way to find the right income protection policy for your needs and situation is to use a comparison website. This will show you all of your options in a clear format, detailing all of the policies available, their individual benefits and costs. You can then compare all your options and take time picking the perfect insurance policy for you.
What other ways can I keep my family protected?
Income protection insurance is key to ensuring your pay cheque can always reach your loved ones, even if you are no longer able to work. However, there are other ways you can help to protect your family, and ways you can provide them with financial cover in tight situations.
Sick days
If you are unable to work due to an injury or illness, your employer may be able to provide you with financial assistance while you recover. Check in your contract to see if you have access to sick pay. If you do, see how much money you would receive for each day of absence, and for how long you would be able to claim sick days. If you are not entitled to paid days of absence due to illness, this could be something to discuss with your manager to see if it could be a possible contract negotiation.
Life insurance
Life insurance provides your dependants with financial assistance if you die. It could be worth investing in, especially if you have a number of dependants who rely wholly on your pay cheque. Your life insurance policy could ensure that your loved ones receive cover for mortgage payments and general living costs in your absence. The peace of mind, knowing you are protecting your family no matter what, could be exactly what you need.
Savings plan
If you are unable to work for a significant amount of time or become suddenly unemployed, it would be ideal to have money to fall back on. Having a savings account with a high interest rate could come in handy in certain situations where your regular pay cheque no longer exists. Put a set amount of money into this account each month and work it around your budget. Try your best not to touch your savings unless it’s an emergency. If you are unexpectedly unemployed or seriously injured, you could feel secure in the knowledge that you have enough money saved up to cover mortgage or rent payments for a few months until you’re back on your feet.
20 -22 Wenlock Road, London, N1 7GU
020 8720 6521
info@moneyspace.com