Income Protection Insurance is essential if you work. Learn more in this article as to why everyone needs to consider it.
Why Should Everybody Consider Income Protection Insurance?
In the unfortunate event that you fall ill or are diagnosed with a disability that prevents you from working, for many, the devastating financial impact means an increased level of stress for them and their families.
Income Protection Insurance, or, Permanent Health Insurance, will pay you a regular income in the event of serious illness or disability. These regular payments will continue until you are fit enough to return to work or when you hit retirement age, whichever happens first.
You must wait at least four weeks before you can access Income Protection Insurance payments, however, in the meantime, you can take advantage of statutory sick payments from your employer.
It is important to note that Income Protection Insurance does not cover your full income. Instead, you can expect to be paid one half or up to two thirds of your full monthly wage.
The Importance of Income Protection Insurance
When you reach working age, Income Protection Insurance becomes a necessity in the event of illness or disability. Sadly, this is something that nobody can predict, therefore, investing in an Income Protection Insurance policy can only be advantageous to the insurance holders.
Due to the unpredictability of our health, without the correct insurance protection, it is unlikely that you would be able to survive financially through your illness solely relying on your Statutory Sick Pay or personal savings. With bills such as credit cards or mortgage in mind, your funds will need to be regular and guaranteed to avoid falling into debt- something that will only further add to the stress of being off work sick for a long period of time.
As well as this, Income Protection Insurance is one of the few policies to provide cover to those who unfortunately begin to suffer with a mental illness. One of the main benefits of Income Protection Insurance is that it conveniently covers most types of illness and disability; ensuring optimum peace of mind for insurance holders who choose to take out this type of policy.
Types of Income Protection Insurance
Instead of being one product, Insurance Protection Insurance is in fact a group of insurance products available on the market to those who suffer a dramatic loss of income as a result of sickness and disability.
The main types of Income Protection Insurance are:
Accident & Sickness Cover : Accident and Sickness Cover offers protection should you have to leave your employment due to accidental injury or sickness. In most cases, this can be on a long-term or a short-term basis; completely dependent on your personal circumstances at the time of injury or ill health.
Accident, Sickness, and Unemployment Cover (ASU) : ASU offers protection in the event of a long/short-term illness, a serious accident, involuntary unemployment, or redundancy. This type of policy is particularly popular due to its diverse cover.
Payment Protection Insurance (PPI) : Having to step back from work can have a detrimental effect on your ability to pay essential bills such as your mortgage or credit card. Payment Protection Insurance (PPI) is designed to cover one specific debt or bill and ensure it is paid up to date should you fall ill and have to leave work. In most cases, PPI will cover your chosen debt for up to 18 months, depending on your insurance provider.
Mortgage Payment Protection Insurance : More specifically designed to cover Mortgage payments, Mortgage Payment Protection Insurance offers a secure safety next to mortgage holders at risk of falling into debt due to loss of earnings and late mortgage repayments- often as a result of losing their job through ill health. MPPI can cover your repayments for up to two years, depending on your particular policy.
Income Protection Insurance for Doctors & Surgeons
By being a doctor or a surgeon, it is likely that you fully understand how unexpected illness can be. No matter your profession, illness and accident can creep up on anybody at any time.
Going from a full salary to NHS sick pay can have devastating consequences on the financial wellbeing of medical professionals, therefore, Income Protection Insurance for Doctors is often considered essential to financial security and peace of mind.
Until you reach five full years of service within the National Health Service, you will not be eligible to your full six months’ worth of Statutory Sick Pay. This makes it even more essential for doctors with under five years of service to buy Income Protection Insurance.
Income Protection Insurance for Contractors & Self-Employed Individuals
Sadly, as a contractor or Self-employed worker, you do not benefit from financial security in the form of sick pay and other employment benefits, therefore, it is vital that contractors consider their circumstances in the event of unexpected illness, disability or injury. One way of doing this is by taking out an Income Protection Insurance policy.
Life continues regardless of whether we are working or not. Bills must continue to be paid, children supported, and weekly food shops brought. No matter what needs to be paid, a regular income must be maintained.
Taking out the correct Income Protection Insurance Policy can offer a financial safety net to you and your family should any unfortunate events with your health occur.
How Much Does Income Protection Insurance Cost
Ultimately, the price you pay will be calculated depending on your personal circumstances and health status at the time of taking out a policy. In some cases, insurance agencies will calculate the cost based on the risk factor of your job. The risk categories are as follows:
Class 1: Administrative staff, managers, secretary, or any other office-based work with minimal milage.
Class 2: Skilled workers, shop keepers, manual labour workers, and those with high business milage.
Class 3: Care workers, plumbers, teachers, or any other semi-skilled workers
Class 4: Heavy manual workers, mechanics, construction workers etc.
Essentially, the higher the risk of your occupation, the more you will have to pay due to higher premium rates.
How Much Will Income Protection Insurance Pay Out?
Typically, insurers will pay a percentage of your yearly earnings between 50 and 70 percent, however, this may be based on the specific insurance company you are seeking a quite from.
For example, if you earn an annual salary of £30,000, you will receive up to 70% of this is monthly instalments as you would with your monthly wages.
Can You Have Income Protection Insurance Without Life Insurance?
It is possible to buy Income Protection Insurance without having to buy Life Insurance too.
You can add a new Income Protection Insurance policy to your current Life Insurance policy with your existing insurance company if you wish. By doing this, you are paying for two separate types of cover- one being a pay out when you pass away, and the other being monthly payments if you have to cease working due to ill health or injury.
Compare Income Protection Insurance
Daddy Insurance can help you compare all types income protection insurance. We take care of all the jargon so you don’t have to. Daddy Insurance aims to protect dads all across the UK from the unexpected, get covered today to protect yourself & your family.