From the cost to what it covers, here’s what you need to know about income protection insurance.
Income protection insurance is handy for any working professional. But what is it?
Income protection insurance has been designed to help supplement your income in the event that you’re unable to work because of an illness or injury. In exchange for a monthly or annual fee, your income protection provider will grant you peace of mind that should you face a long-term critical illness or be unable to work for an indefinite amount of time due to an injury, you won’t have to worry about where you’re going to find those cost of living funds.
Interested in taking out an income protection policy? Let’s learn a little more about how it could be a good option for you.
One of the best solutions for working parents, especially those who are the breadwinners, is income protection insurance, which is a pay supplement.
The payout from income protection insurance typically occurs each month. The amount you’ll typically get while you’re unable to work is between 70 and 75 percent of your salary. Income protection insurance has been designed to offer you financial stability so that you can concentrate on your recovery.
Life can throw a lot at us, from serious and crippling illnesses to accidents and injuries. You can have the necessary piece of mind thanks to income protection insurance. It enables you to live more fully and worry less about what may have been.
Do I Need Income Protection Insurance?
Before taking out income protection insurance, you’ll need to assess your personal circumstances. It isn’t always essential. Income protection insurance could be important if any of the below circumstances apply:
- Self-employed or small business owners: Self-employed people are generally not entitled to sick pay or annual leave. As all days off go unpaid, a self-employed person would usually benefit from income protection insurance.
- People with dependents: Whether it’s your kids, your parents or a disabled dependent, if you have someone in your life that relies on the income you earn, income protection insurance will offer comfort that you will be able to provide for them no matter what.
- People with financial obligations: If you have any debts, such as a mortgage, that you’ll need to continue to pay even if you’re unable to work, income protection insurance could be your saviour.
How Much Income Protection Insurance Do I Need?
Start by creating a budget before calculating how much income protection you require. This will enable you to calculate the revenue you’ll need to replace and comprehend your monthly expenses. You might also want to consider including paying your income protection insurance provider in your calculations.
Here’s a few things to remember to factor into your budget:
- Mortgage repayments or rental costs
- Car finance, insurance and other running costs
- Utility bills
- Food and any other financial responsibilities such as childcare, etc
How much income protection insurance you’ll need is entirely dependent on your personal circumstances.
Income Protection Insurance for Doctors
As most doctors make significant salaries, purchasing income protection insurance is a necessity. Imagine receiving a serious sickness or degenerative disease diagnosis that renders you permanently unable to work. A sudden injury could also prevent you from fulfilling your duties at work. Without your income, will your household be able to make ends meet?
Income Protection Insurance for Contractors
Often, contractors are not entitled to employee benefits like vacation time or sick pay. In light of this, income protection insurance can be the best safety net. In any situation, protect your income and make sure that you and your family can maintain their financial stability.
Income Protection Insurance for Self-Employed Dads
The fact that every day off is entirely unpaid, this is one of the biggest drawbacks of self-employment. Consider yourself in the situation of being unable to work for an extended length of time. Then what? Well, income protection insurance can help in this situation. For the period of your recuperation, it can provide a monthly payment of up to 75% of your disclosed wages. Give yourself the assurance that your living expenses will be met in whatever situation.
How Much Does Income Protection Insurance Cost?
The cost of income protection insurance depends on your personal circumstances along with the level of cover required. Typically you can expect to pay somewhere between £10 and £80 per month. A number of factors will impact the price of your income protection insurance policy. These include:
- As a general rule, the older you are the more expensive your income protection insurance policy is likely to be.
- Overall Health: Your medical history will also impact your income protection insurance policy fees. If you have already been diagnosed with an underlying health issue, your policy is likely to be much pricier if available at all.
- Lifestyle: Whether you smoke or not, how much you drink on a weekly basis and how active you are will all impact the overall cost of your income protection insurance policy.
Other things that will impact the cost of an income protection insurance policy include the length of the policy and the level of cover. The longer you want a policy to last will ultimately impact the price. As will the level of cover you require, i.e. how much you’ll need the policy to pay out.
Income protection insurance can be taken out in two different ways. It can be purchased alongside a life insurance policy (or added on to an existing policy); or it can be bought separately. The way you choose to purchase your policy is down to personal preference.
Do you want to pay two monthly premiums or one? And is your life insurance provider as competitively priced with their income protection insurance? Those are just two things to think about in the battle of adding it on vs. taking out a separate policy.
Compare Income Protection Insurance as a dad with Daddy Insurance. You can compare prices & policies from the top UK insurance companies. Protect your income today!
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