Would you be able to manage without income protection? This is a question that everyone needs to ask who works full time. A sudden loss of income could cause enormous financially stress and worry as you would have to find money from somewhere to be able to continue meeting your rent, your utility bills and your grocery bill for the month. With income cover to rely on as protection against redundancy or incapacity you would have an income at least for the term which could be enough for you to have found another job or recovered and got back to work.
While income protection is another form of insurance that you have to find money for each month, it could be a very valuable form if you do become incapacitated or unemployed. If you shop around for your policy and compare the cost then you can keep the monthly premiums down to a minimum. Independent providers offer cover that is based for one thing on the amount you choose to protect of your monthly income. This is usually up to £1,500 or half of your gross monthly income whichever is the least amount. The income you agree with the provider is the paid back to you as tax free payments once you have been incapacitated or unemployed for a period of time. This is generally between the 30th and the 90th day. Your benefit would then usually continue for either 12 months or some providers offer 24 monthly payments before their cover ceases.
With a policy behind you to rely on you would then have a substantial sum of money coming in while you concentrated on making a recovery or went about looking for work? This income could be used as you wanted, you would have money for the rent for example, towards your utility bills and to keep your family fed.
When considering a policy also check to out if the cover would pay out in the event that a family member should become incapacitated. If it does offer carer cover then you would have an income coming into the home while you nursed your loved one back to health. Not all providers are generous enough to offer this so check in the small print before taking out the policy.
You can also tailor the policy to suit your needs. You can of course have protection against redundancy and incapacity in the same policy. However you could just choose to take out protection against redundancy alone or incapacity alone if this would suit your needs more. The events you take protection against would factor towards how much you would have to pay for your policy.
Finally be aware that the policy benefits covered here relate to income payment protection although we say income protection. There is another form of income cover that would only payout for incapacity which would continue paying out up until your retirement age if needed.
Related Posts
- Payment protection could ensure you did not fall behind on your repayments
- Save on income protection insurance online
- Income protection supplies a replacement income if unemployed or incapacitated
- Mortgage payment protection insurance – One form of payment protection insurance
- Loan protection insurance could stop debts building up