How many of us want to spend much time thinking about the worst things that could possibly happen to us? The short answer is... not many. We would much rather be immersing ourselves in the things that bring us joy in life right now. Or we might feel that we have too many ‘immediate’ challenges in our lives to ‘fire-fight’, to even have the time to consider what unexpected adverse events could occur in the future.
This brings us neatly onto the subject of income protection insurance. It works on a very simple principle: if you are rendered unable to work, and therefore to pay your way in life, due to an illness or injury, this type of cover can protect you by providing monthly tax-free payments.
However, there might also be circumstances in which you feel income protection insurance wouldn’t really be necessary for you. So, let’s take a closer look at some of those.
“I’ll get by on my savings if I get ill”
Technically, it might be true for you - depending on your circumstances - that in the event of sickness or injury preventing you from working, you could live off your accumulated wealth for a while. But even if that was the case, would you want to be draining your hard-earned wealth in such a way?
The fact is, for some of us, income protection insurance might be more of a ‘nice to have’ than an absolute ‘essential’... but the lines between those two categories can also become somewhat blurred.
If you want to keep more of what you have worked so hard to earn in life, you will almost certainly prefer being able to make a claim on an existing income protection policy over relying on savings.
“I’m under 30, so I don’t really need it yet”
This is where we get onto the question of, “but how much would income protection insurance cost you if you left it until later?” The older you get, the likelier you are to develop an illness, and the higher you can therefore expect income protection cover to cost.
And of course, it’s not as if twenty-somethings never fall ill or sustain an injury that prevents them from working, to say nothing about the often-precarious living and financial conditions that many younger people face that can put them at risk.
So, with income protection insurance, it can often be a good idea to take out such a policy when you are young, and will therefore pay less for cover, and have the policy in place to protect you.
“Income protection insurance never pays out anyway”
Erm, yes, it does! According for figures from the Association of British Insurers (ABI) for 2020, 86.5% of income protection claims did lead to a payout.
So, what happened in those instances when a payout didn’t occur? The things to remember here are that, as long as you are rendered unable to work due to medical reasons, a doctor has signed you off as being unfit to work, and you meet the definition of incapacity set out by your insurer, your income protection policy will pay out.
You will, though, need to be aware of what method your insurer uses to assess this. They may, for instance, go by the ‘own occupation’ definition, whereby if your illness or injury prevents you from carrying out the main tasks your job requires, the policy will pay out. So, you should be sure to scrutinise this aspect of the policy before purchasing it.
Are you ready to look seriously at income protection insurance, but still need some help and advice to determine the best route forward? If so, you are very welcome to call our no-obligation advice and quotation line today, on 0800 316 6917.