Is income protection really necessary in today’s environment? Life is very uncertain and job security is no longer a common part of our vocabulary as it is pretty much non existent. But to answer the question let’s look at some features of the policy and the benefits you can receive then you can make your decision.
Features and Benefits
Firstly, just to be clear, this product is not to be confused with the ‘income protection insurance’ which is the longer term insurance that pays out for years’ and does not cover unemployment.
The short term policy is designed to pay you a regular monthly income for a specified period and at named events. The three main events are sickness, accident and involuntary redundancy.
The income will be paid free of tax for a period of 12 or 24 months depending on the providers terms and conditions. Some policies can be attached to specific debts such as loans and mortgages. If this is the case then maintaining these monthly commitments will be the focus of the provider.
Premiums can be very low if you know where to shop and generally once a policy is taken out the premiums do not increase as you grow older. However many providers will charge lower premiums to younger applicants on account of the probability of them needing to make a claim being lower than that of an older applicant.
Protection products often carry exclusions relating to existing medical conditions, type of employment and number of hours worked to name a few. When taking out your policy, you should ask your provider about all these just to make sure your circumstances are covered. By doing your homework, you can avoid the disappointment of having your claim rejected at a time when you need the money most.
More About Premiums
Earlier it was mentioned that if you knew where to shop your premiums could be a lot lower. To expand on this point, if you were to obtain your income protection product from an independent provider then the cost of premiums will be much lower than at a high street provider.
Take British Insurance for example, they are an ethical provider of protection products and they can offer premium savings of up to 80% below that of high street companies. This makes their products highly competitive.
Usefulness Of Protecting Your Income
If you are out of work and there is no source of income, you may not qualify to receive state benefits as according to the Office of National Statistics the number of claims for benefits is up. In addition family and friends may not be in a position to bail you out.
The only thing left is to secure your own future with an income protection policy. With this insurance in place you will have the peace of mind you need, knowing that if or when you need financial help, it will by available to you.
Related Posts