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In this month’s blog we’ll dig a little deeper into Income Protection Insurance, setting out exactly with it is, how it works and why it’s so important.
What exactly is income protection?
Simply put, Income protection, provides regular payments that replace part of your income if you’re unable to work due to illness or an accident. Which you can then use to continue to meet the fixed costs associated with running a household i.e. mortgage / rent payments, household bills etc.
If you make a successful clam, the payments can continue until you are able to work again, retire, die, or reach the end of the policy term; whichever is sooner.
How does it work?
There are a range of scenarios that would allow a claim to be made, but typically things like being diagnosed with a serious illness, being involved in an accident, or being signed off work a mental health condition. Anything really that could prevent you from performing your job role may be relevant.
Income protection will typically bolt onto whatever sick pay provision you may get from your employer, whether that be 6 months full pay, 1 month’s full pay, or nothing. The product can be structured to meet your specific circumstances.
You can even shape your Income Protection product to suit a particular budget. For example, you can opt for cover that pays you an income for a defined period of 1 or 2 years as a maximum per claim. Or you can opt for a full income protection product that could pay you indefinitely if you never worked again for the rest of your working life. Or you could opt for an age costed product which can offer you a lower starting premium from the outset, which is great if you’re just starting out. Each of these options can affect the price you will pay for your cover but will ensure that you are still adequately covered if you had to make a claim.
Why is it important?
Being unable to meet mortgage or rental payments could put your home at risk, not to mention the stress off not being able to pay any other financial commitments you might have such as car loans, mobile phone contracts etc. Falling behind with any of this can also affect your credit rating and affect your ability to borrow in the future.
Recent research carried out by Legal & General revealed that a typical UK household would only be able to survive on savings alone for 32 days, a quarter wouldn’t have enough savings to last a week, with 30% of households having no financial back-up plans whatsoever. With statistics like these, ask yourself how you could cope financially if the worst were to happen.
Remember that life events can strike at any time and impact your ability to provider for yourself or your family. As demonstrated by the injuries suffered by Welsh rugby international Non Evans after being involve in a hit and run, read her full story via the following link https://www.walesonline.co.uk/news/wales-news/hit-run-leaves-former-rugby-28693363
If you would like to explore your Income Protection options. Our protection specialist at Allegro Mortgages would be happy to discuss your options, and provider you with a quote for your consideration. Please use the following link to schedule your free consultation https://appt.link/insurance-consultations-and-applications-allegro-mortgages/initial-insurance-consultation-allegro-mortgages