Just imagine if you were unable to continue with your job due to suffering an unavoidable accident or being diagnosed with an unforeseen illness; either of which lifestyle-changing set-back may render you incapacitated in a work sense.

According to the ABI, in recent years almost 1 million of us became unable to hold down our existing occupations due to picking up an injury or being struck down with a serious health condition. If you are the main breadwinner in your household the potential knock-on effect and medium-to-long term consequences don’t bear thinking about.

The possibility of savings drying up after a relatively short time would be a very real one for most of us, while living off what savings we might have wouldn’t be a viable solution. Plus, there’s only so much assistance immediate family and friends could do in such a scenario, despite their best intentions and rallying to your financial SOS from the outset. And let’s face it. Statutory sick pay will only stretch so far and cover limited aspects of your daily life and times.

Therefore it’s important that you have some form of contingency plan in place to ensure that you aren’t relying on others to provide a safety net should this type of situation play out. One of the best – and certainly most far-reaching of – security mechanisms you could put in place to reduce the risk of suddenly finding yourself physically or psychologically unable to continue your employment is to arrange an Income Protection Insurance policy with a reputable provider.

Although it’s not a magic wand, that when waved will immediately alleviate all your troubles, it’s fair to say that such a dedicated insurance product will take a significant amount of pressure on the injured/ill party, at least in terms of financial demands which will mount up during your involuntary lay-off.

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Tell me more about Income Protection Insurance?

An Income Protection Insurance plan is designed to help the policyholder if they find themselves in a position whereby they can no longer work as a result of a physical or psychological injury or illness.

Essentially such a policy enables the insured person to continue to cover their outstanding repayments and manage their on-going debt by way of providing a percentage of a regular income stream to replace the income lost from the lack of income being paid from employment.

This typically rolls out until such time as the individual concerned is considered healthy enough to return to their previous role or, they reach recognised retirement age, the term of the policy expires or indeed, the policyholder dies; largely depending on personal circumstances and the specific insurance policy thrashed out by both parties before they signed on the dotted line, so to speak.

What other important aspects should I be aware of?

Well, traditionally the payments would be scheduled to begin once any company/statutory sick pay entitlement comes to a natural end; that, or any other type of insurance cover which was triggered by your change in employment circumstances expires.

From the policyholder’s viewpoint, this works out to their advantage, for the simple reason that the longer the deferment period (how long you have to wait until your policy ‘kicks in’) the lower the monthly premiums will be.

It’s beneficial to utilise all other means of income prior to starting a claim on the Income Protection Policy.

Another key point worth flagging up is the underlying fact this type of insurance package tends to extend its protective arm around a wide range of illnesses, and moreover provides a monetary ring-fencing solution either in the short or longer term, this is dependent on the policy type together with the definitions of incapacity and what is and isn’t covered by the Income Protection policy.

In most cases, the policyholder will be able to claim as many times as required during the term of the agreed policy.

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What is the difference between Income Protection Insurance &  Critical Illness Cover?

It might do, at first glance, however, there are many vitally important differences when you read a little further; the main one being that a Critical Illness policy only paying out a one-off lump sum, and with particular regards to the one serious illness.

Some people wrongly believe that Income Protection insurance shares similarities with short-term Income Protection plan (STIP) too, which again couldn’t be any further from the truth of the matter. Not least because while it pays the policyholder with a monthly sum related to their income, this payment is only available for a  limited period a typical example is a maximum period of 12 months, whereas Income Protection payment periods range for much longer periods of time (in the region of 2–5 years on average) .

Do I Need Income Protection Insurance?

Well, to reiterate the point we made earlier about some 1 million UK workers annually compromising their job continuity as a result of becoming ill or injured, would make discarding the idea a risky one, in our honest opinion.

At the end of the day you have to ask yourself the question whether or not you could afford to take such a chance, and ultimately that’s a question only you can answer.

Think of it this way, irrespective of having a partner, children or any other dependents relying on you, the prospect of being unable to work due to a serious illness is reason enough to put financial security in place to ensure that the important things/bills/debts are covered.

This is precisely what Income Protection insurance packages offer, the risks are increased if you happen to be self-employed (or an employee without sick pay to rely on), as you could easily be left financially high and dry should the worst happen.

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Does Everybody need Income Protection Insurance?

Of course, there’s always some folk who might have alternative plans if and when such situations unexpectedly crop up, for example, those who have ready access to a generous sick pay (i.e, employee benefits packages which provide the individual with an income for 12 months or more).

Some people may be entitled to government benefits, others may have substantial savings to help cushion the blow for an extended period, while some might view the situation as an opportunity to cut their losses and seek early retirement (the by-product of which would see pension release, perhaps).

Another scenario where people could hypothetically get by should their professional life be thrown into the balance due to the onset of ill health/injury, would be if a partner/family earned enough to cover any perceivable fiscal shortfall.

How much will Income Protection Insurance cost?  

It’s almost impossible to determine just how much an individual may be quoted for Income Protection insurance plans, Generally-speaking, a provider will take into account such elements as

  • Age
  • Occupation
  • Health (ascertain whether an applicant smokes or not, together with disclosures regarding weight, family medical history, etc)
  • Percentage of their annual income they’d like to cover
  • The waiting (referral) period

Who Should I Speak to About Income Protection Insurance?

For more detailed information about Income Protection insurance and how and why it could benefit you, personally, as always we would suggest having an informal chat with one of the experienced team here at Quick Quote Life; who are well versed – and trained – in offering people the lowdown on the various Income Protection policies currently available and how you could set about arranging a far-reaching, all base-covering policy as quickly as possible. Please, call us today, as we’re waiting to hear from you.

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