Just The Facts: Income Protection Insurance
In an age of job uncertainty and rising costs of living, safeguarding and maintaining your income is more important than ever.
However, only 1 in 10 people have Income Protection Insurance, and lot of that comes down to the many misconceptions people have about it.
It’s smart to be cautious when it comes to buying insurance, but with 1 in 5 needing more than 3 months off work for illness, you may not be able to afford being without it much longer. So, let us introduce you to all the facts you need to know about Income Protection Insurance, and debunk the myths that are stopping you from getting it:
So, What Even Is Income Protection Insurance?
Income Protection Insurance is a policy that pays out a tax-free percentage of your regular income should you need time off work due to illness or serious injury. It lasts until you either return to work or your policy term ends. It can be claimed at any time after an agreed deferral period and because it pays out at regular intervals just like a salary, you can keep budgeting and paying your expenses on time. Income Protection is also designed to work for you no matter your circumstances. Should you want to pay more or less into your policy, or check if a certain illness is covered, your insurance provider will work with you to ensure you’re getting the most out of it.
It’s ABSOLUTELY NOT the same thing as the much-dreaded Payment Protection Insurance (PPI). PPI covers a particular debt and pay outs go to the lender controlling the debt. Income Protection is paid out to and controlled by you, so the money can go on whatever needs to be covered. It’s also not a form of unemployment benefit. You can only apply for Income Protection if you are fully employed, which means you can’t apply for it if you’re already off sick or injured.
It Sounds Expensive. Shouldn’t I Get Sick Pay from My Employer?
Yes, by law, your employer is required to pay you statutory sick pay, which currently stands at £92.05 per week for up to 28 weeks. However, with household bills and food shopping costing an average of £90 per week alone, it soon becomes a question of where the money comes from to afford everything else. When you’re covered by Income Protection, the tax-free percentage of your income paid out is almost guaranteed to be higher than any sick pay and can even be achieved with policies as low as 18p a day.
But I’m Rarely Sick Anyway, and My Family Will Help Me Out.
That may be true, but no one is invincible. Accidents can happen to anyone at anytime in the workplace and there’s no telling what genetic, hereditary or age-related illness you may pick up over the years. Then there’s the issue of what happens when the Bank of Mum and Dad runs dry. They can’t take on your financial burdens forever and neither can any spouses or partners you have, with 1 in 5 admitting that they would be worried should their other half not be able to work over the following year.
You’ll Find an Excuse Not to Pay Out, Like If I’m Self-Employed or Have A Pre-Existing Health Condition.
Despite what you might’ve heard, most insurers actually pay on 9 out of every 10 Income Protection claims every year and there are very few roadblocks to doing so. For the self-employed, whose income would be reduced to nothing if they had to take time off for illness or injury, Income Protection would prove vital. Insurers will find a way to help you find the best policy based on factors like net profits and margins so you will receive fair cover.
As for pre-existing conditions, its still worth considering protection as you never know when another condition or an injury could arise. Just remember to ask an insurer about pre-existing conditions, as you might be surprised by what they can cover.
Feeling More Informed?
Then put those rumours to bed and contact us here at Fuse Assurance. Our team of friendly advisers are on hand to craft the perfect Income Protection Insurance policy for you, as well as answer any questions you still have. So, don’t keep putting your income, and your life, on the line. Click the button below for your free, no-obligation quote today.