Life admin when you are a busy parent can often take a back seat, with 101 other things to remember, think about and consider. I’m sure many parents can agree that one of those forgotten things is life insurance. Perhaps you have been meaning to take it out for years, but never really gotten around to it.
Or maybe you have a life insurance policy but haven’t considered the other equally important insurance products that fall under the life insurance umbrella. One of these often-overlooked products is income protection insurance.
What is income protection insurance?
As you may have guessed by its name, income protection protects your income! It is designed to help you if you find yourself out of work on a long-term basis due to serious injury or illness. When you successfully claim upon an income protection policy, it pays out a regular proportion of your salary. You decide on this amount when you take out your cover, but it’s usually around 50-70% of your salary.
This regular proportion of your salary is there to help life keep ticking over as normal when you find yourself in a difficult situation and unable to work due to injury or illness. You can use it for whatever you like, such as keeping on top of bills and mortgage/rent payments, paying for specialist healthcare equipment you might need or adaptations to your home. Whatever it is, income protection insurance takes the financial pressure off.
Once you make your claim, you could receive a regular income until you either:
- Recover and return to work
- Reach state pension age and retire
- Stop paying your premiums and your policy ends
- Reach the end of your policy term
- Pass away
And let’s say for example that you make a recovery and go back to work. You can then claim as many times as you need to on that same policy until that policy term ends.
When do I need income protection insurance?
Technically, every working person with financial responsibilities of some sort should seriously consider income protection – even if that’s just the financial responsibility of owning a car.
But of course, the more people you have depending on you and your income, the more important this insurance product is. That’s why it’s especially important for parents to consider. If you became seriously ill or injured, you’d want to shield too much disruption, confusion and sadness from your children as much as possible, right?
By being able to claim on an income protection policy and receive some financial help means that you won’t have to say no to that next school trip. You won’t need to worry about paying for school dinners each week or being able to treat the kids to a day out on the weekend. Their life can continue with as much normality as possible, and you can relax and focus on recovering.
Is income protection insurance expensive?
As with almost any insurance, the price of income protection premiums will depend on a range of things. These include:
- Your age
- Whether you smoke
- Your lifestyle and whether you have any high-risk hobbies such as extreme sports
- Your job
- Your health (current health, body mass index and family medical history)
- The deferral period that you decide on
- The income you’d like to receive each month
Generally speaking though, income protection policies are available to suit a range of different budgets. The more income you choose to cover, the more expensive the premiums will be. To keep costs down, it’s a good idea to take income protection out earlier in life. Even though you might feel like your chances of becoming seriously ill or injured are slimmer, insurance providers will consider you less of a risk and thus charge you less per month for your policy.
Convinced? I hope so! If the pandemic has taught us anything, it should be that none of us are invincible and we’d be foolish to assume so. Give your family that extra layer of protection and take out income protection insurance, so they can continue living the life they love no matter what happens.