If one form of protection insurance helps to protect one thing in your life, combining two forms of protection insurance in one policy could be a great way to double your level of protection... right?
That’s certainly the conclusion that many people reach. But it’s also important to be well-informed and clear-eyed about exactly what a combined life insurance and income protection policy would mean for you, and what level and nature of protection you could expect.
With that in mind, it’s worth asking yourself the below three questions when you are considering whether combining income protection and life insurance in a single policy would be the right choice for you.
What exactly does the given policy cover?
We’ve addressed this in greater detail on the page of our site dedicated to combined insurance policies. But in a nutshell, a typical combined income protection and life insurance policy would pay out a monthly tax-free amount in the event of long-term illness or disability preventing you from working, and if you were to die, a lump-sum payment would be made to your beneficiaries as well.
Still, no given combined policy of this nature will be entirely the same as the next. And you will need to make certain decisions - for example, on whether you would want the income protection part of the policy to pay out over just one to five years, or all the way until the age of retirement.
This, in turn, makes it crucial to scrutinise the fine print of any policy you are offered, to make sure it is what you think it is, and it matches well to your needs.
Do you need both these areas of coverage?
The very fact that you are considering this type of combined policy, indicates that you think both the income protection and life insurance elements of coverage would be useful, important, or essential to you. But before you commit to a policy, it’s worth asking yourself again whether that is truly the case.
If, for instance, you are paying off a mortgage on a property, but you have no one - such as any partner or children - who are financially dependent on you, the chances are that you won’t really need life insurance. That’s because, even if you were to pass away, any outstanding mortgage on your home would be settled by the proceeds from the sale of the property after your death.
Similarly, there may be reasons to consider whether a new income protection policy is all that crucial to you, such as if you already get this form of insurance as a benefit from your employer.
Could it be cheaper to buy income protection and life insurance separately?
Before you agree to a given combined life insurance and income protection policy, it could also be a very good idea to look at how much it would cost you to buy these forms of insurance as two separate policies. You might find that it’s actually the more cost-effective option for giving you the exact insurance policy you require.
The above three questions aren’t the only ones that could potentially greatly help you make the right choice when it comes to combined income protection and life insurance, but they could certainly go a long way to narrowing down your options.
And don’t forget that if you would appreciate some slightly more direct help from us, it’s free to call our no-obligation advice and quotation line, on 0800 316 6917. It could yet turn out to be one of the best decisions you make for the financial security of your household this year.