Are you covered?
Ask yourself this - what would you do if you were unable to work due to ill health or an accident?
According to the Association of British Insurers (ABI), during 2017, one million people in the UK were unable to work due to illness or injury.
With the current weekly payment for the UK government's Employment and Support Allowance (ESA) at up to £73.10 for the work-related activity group and £109.65 for the support group, could you meet your household bills on these earnings?
For most of the UK adult population, the answer would be no, however, very few people take out Income Protection Insurance. Not to be misconstrued with Payment Protection Insurance (PPI) which is attached to a particular financial product such as a credit card, Income Protection Insurance - also called Permanent Health Insurance - offers a long-term solution to replace part of your income should you become unable to work due to certain illnesses or injuries.
The type of cover you get depends on the type of policy you take out; however, you can generally expect to receive payments once your sick pay has ended until you recover, retire or die; depending on which comes first.
Do you need it?
It doesn't matter whether or not you have children or other dependants, if illness or injury would result in not being able to pay bills, then Income Protection Insurance is definitely worth considering.
Furthermore, if you're self-employed or employed and you don't have sick pay to fall back on, this type of policy is even more essential.
Peter is Self Employed and earns income of £30,000 per year before tax. Peter wanted a claim to pay out if he was off work for a period of 13 weeks or more. He was able to insure himself for 60% of his net profit which would give him an income of £1,500 per month if he wasn't able to work due to accident or sickness.
He could claim the £1,500 until either he returned to work or potentially until the end of the policy if he wasn't able to work ever again. Peter's policy ends when he is 65 years old, which means he was safe in the knowledge that if anything happened and he wasn't able to work him and his family would be financially secure.
Source: Legal & General -however other providers will have different limits and rules in place. This is an example only.
The monthly payment far exceeds the government's Employment and Support Allowance (ESA) payment and for anyone in this situation, whether single, in a partnership or with a family, it could be the difference from having to sell your home to being able to stay in it and meet your financial needs, providing security at a very stressful time.
How much will it cost?
How much you spend on Income Protection Insurance each month will depend on your personal circumstances, earnings and health. It is best to seek advice from an Independent Adviser who can source the best policy for you, across a range of providers. The adviser will also assess your needs to see if you would be better suited to other policies, such as Life Insurance, Critical Illness or Short-Term Income Protection.
We can help you!
If you would like more information or help with your mortgage please call us on 01344 225 149 or 07979 690 056. Alternatively please send us an email at firstname.lastname@example.org
Simmonds Mortgage Services is an appointed representative of Stonebridge Mortgage Solutions Ltd and can source the most appropriate cover from its panel of insurers with a free review of your overall protection and insurance needs. As with all insurance policies, conditions and exclusions will apply.