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If there’s ever been a time to highlight the importance of financial security, it’s now. The COVID-19 pandemic has taken so much from so many, including jobs, and that much relied upon regular pay packet.
However, pandemic or no pandemic, we’re not invincible. It’s one thing encountering a serious illness or injury before you start a family of your own, but once you are a parent, your responsibilities in life dramatically increase.
What would happen to your family if you were rendered unable to work due to serious illness or injury? What if your side of the family income disappeared? This is why every parent and every working person should consider income protection insurance.
What is income protection insurance?
Income protection insurance falls under the umbrella of life insurance. It provides around 50-70% of your salary (you decide how much cover you take out) if you become too ill or injured to go to work. It pays out in regular lump sums until you either reach state pension age and retire, you recover and go back to work, or you pass away. Whichever comes sooner, basically.
The cost of an income protection insurance policy depends on a number of factors. The usuals that you would perhaps expect are your age, your job, whether you smoke or have previously smoked, your current health and your family’s medical history. It also depends on the percentage of your income that you’d like to cover and the range of illnesses and injuries covered.
The price of income protection policies will differ between individuals, but you’re likely to find something that falls within your budget if you shop around or better still, approach a broker to help find you the best deal.
Why is income protection so important for parents?
When you are in your teenage years, life insurance products probably don’t even cross your mind. It is not until perhaps you buy your first home that you are urged to take out life insurance. Income protection, however, is one of the lesser talked about insurance products out there but is arguably more important! After all, do you think you are more likely to get seriously ill or injured during your working life or pass away? Probably the former, I would say.
When you bring children into the world, you are responsible for these little lives. You must provide and care for them and a stable income can be a big part of this. Children don’t come without their costs! Having income protection means that no matter what, you will have money coming in to keep your world turning as normal, allowing you to put food on the table, pay for school trips – whatever it is that normal looks like to you.
Can self-employed people take out income protection?
You may be wondering how this insurance product works if you are self-employed without a fixed wage. You can definitely still take out income protection and actually, you’ll probably find it more valuable than anyone else!
Think about it, if you’re self-employed then you probably need income protection more than anyone. You won’t have an employer to help you out with sick pay if you are off work – it’s all on you. That can be a scary prospect, especially when you have a family to raise. Without the safety net of income protection, you’d have to pin your hopes on qualifying for Employment and Support Allowance which is financial support from the government if you can’t work to due illness or disability.
Income protection, however, can offer you much more money upon claiming. Your provider or a broker will be able to work with you to decipher how much cover you’ll need. Your income will usually be based on your share of the pre-tax profits generated by your business and the amount of cover you will need will depend on the size of your mortgage and whether you have taken out any loans to build up the business. Even if you have some difficulty proving your income, there are plenty of options available to you.
If illness or injury would mean that you can’t go to work and pay the bills, you should definitely consider income protection insurance. It’s a no-brainer. You’ll thank yourself for it no end if you find yourself bed-bound for 6+ months!