Sometimes things happen in life which we don’t plan for. Sickness, an accident, the inability to work or losing a family member can have a huge impact on your life and that of your family.
When we review our outgoings, it’s tempting to overlook our insurance policies. However, protecting yourself, your family and your finances is so important.
For instance, research shows that just 6% of us in the UK have income protection insurance. That means we are more likely to insure our mobile phones than our income.
Yet, if you think about it, it’s the first thing we should be insuring. Our ability to earn and our income is what pays for everything else in our lives: our homes, energy, food, cars, clothes, phones, activities, and holidays.
Just imagine for a moment if you could not work due to a long-term sickness or injury. How would you cope if your income stopped? Your sick pay, if you have it, will only last for so long. Or how would your family manage to pay the mortgage and bills if you were no longer around?
Let’s look at some of the protection policies you could have.
Income Protection Insurance will provide a regular payment which can replace part of your income if you’re unable to work due to an illness or accident.
You could receive a replacement income until you can start working again, or until you retire, or reach the end of your policy term.
Will my employer help?
Often sick pay ranges from 6-12 months and it’s worth checking with your employer what benefits you would have if you were unable to work.
If you are self-employed or run your own business, then this is even more critical. One of the benefits of being self-employed is that you are in control of your business success, but with that comes risks. If you were not able to run your business and you have no employer to turn to for help in the short term, then things can get very stressful.
Critical Illness Cover
A Critical Illness Plan is different from Income Protection in that it provides a lump sum payment for you if you’re diagnosed with a specified illness. Illnesses can include things such as cancer, a heart attack, stroke, and other conditions that may affect your life such as loss of sight or loss or a limb.
If you are diagnosed with a critical illness, then you may not be able to work, and this will affect your ability to pay the bills or mortgage. This could mean debts would mount up, adding to an already stressful time. Depending on the policy, a lump sum pay-out could be used to cover your mortgage, allow you the necessary time off work to recover, or pay for adjustments you need to make in your life moving forward.
Life insurance will pay out on death. It can help your children and family if you are no longer here and can pay off debts such as your mortgage, pay for funeral costs and potentially provide an ongoing income or a lump sum payment for your dependents. A life insurance plan covers you for a fixed period and pays out a lump sum if you die during that time.
Let’s look at some of the benefits of these protection policies.
Having a regular pay out or a one-off payment would help you or your family continue to pay:
- The mortgage or rental payments.
- Household bills.
- Any childcare costs.
- Any school or university fees
- The costs of running a car such as loans, tax, and insurance.
- Any household alterations you may need due to injury or disability.
- Help towards funeral costs and paying off debts.
- Help to maintain a standard of living you and your family are used to such as family holidays, household and personal purchases, school clubs and activities, hobbies, and social life costs.
Which policy is right for you?
If you’ve compared Income Protection, Critical Illness Cover and Life Insurance, you might be wondering which type of insurance would be most suitable for you?
It’s crucial to get solid, trusted advice so that you get the right polices in place.
Our advisors look at your circumstances and give you advice that’s right for you. They will explain what the different options are, and which solutions are available, recommending a solution which best suits the needs of you and your family.
No one person, family or life is the same that’s why it’s crucial that you get expert advice to help you to protect what matters most.