INSURANCE

Insurance for Income Protection

Insurance for income protection can provide you with peace of mind in a world where the future is often uncertain. Finding yourself unable to work due to illness or accidental injury is a situation which you cannot really prepare for emotionally. Fortunately, it is possible to take precautions financially to prevent the loss of income leading to the still greater threats of losing your home or possessions through mortgage, rent or bill arrears.

Insurance for income protection can provide you with protection when you need it most. When you are sick or have had an accident, this insurance cover can help you cover those liabilities that don't go away just because you are not able to earn. The insurance policies available are often very flexible, allowing you to set the level of the premiums at a cost that is affordable for you and a level of protection that will allow you to cover your outgoings each month that you are not earning. You can choose cover that is linked to inflation or at a fixed premium, and you can select the percentage of your gross earnings that you wish to protect.

It is important to read the details of the insurance policies carefully before purchasing protection. Be aware of any disclaimers or exclusions before making your decision. You can use our free quotation comparison to find the best possible coverage at a level you can afford.

Why take out income cover?

A policy providing protection against loss of work through illness or injury can help you cope with every day costs such as utilities bills and rent or mortgage payments. With insurance for income protection, during the period that you are unable to work, you will receive regular payments which can help you to maintain the standard of living you and your family are used to. In the meantime, you can concentrate your energies on getting better rather than worrying about how you are going to cover the bills with a reduced income. Individual policies vary, but generally you can claim multiple times for the same illness or injury as required. The payments you receive through insurance for income protection are also generally tax free.

Limitations of Incapacity Benefits

With recent changes in the laws regarding what used to be known as Incapacity Benefit, it is increasingly difficult to qualify for state benefits when you are too ill to work. Even in the event that you are able to qualify for the new Employment and Support Allowance, the level of payments is low, and almost certainly not enough to cover a mortgage, bills, credit cards and other expenditure. This is where insurance for income protection becomes an attractive method of securing your income in the face of an unknown future. Purchasing income protection cover means that you don't have to worry about your family's welfare, if your earnings become affected through illness or injury. With this cover you know you will receive a payment each month from your insurer that will keep you secure during a difficult time.

It might seem that the likelihood of losing your job is so marginal that it is not worth looking into insurance to cover this eventuality. In fact, the Government's own figures recently showed that 2.6 million people of working age were claiming incapacity benefits [1]. Losing income through injury or illness is clearly then not a situation to consider lightly. The need for insurance for income protection is particularly strong when we are faced with ongoing financial commitments that we simply can't ignore. Mortgage payments, utilities bills, credit card and mobile phone bills - these are all facts of everyday life for most people. Unfortunately these demands on our finances don't go away when we lose work. Insurance for income protection can plug the gap while you are unable to earn.

Unfortunately, you cannot claim insurance for income protection if you have been made redundant or lost your job. However, the insurance policy does look after you in the event that you can't work due to ill health or accidental injury. With most protection of this type, they will also pay however many eligible claims you make. As long as the insurance policy is in place, if you are unable to work due to illness or injury, they will pay even if you make several claims during the same qualify period.

Insurance for income protection fills in for the money you lose when are not earning because of illness or accidental injury. It is particularly useful for those who have a mortgage to pay, as you don't have to worry about losing your home. The payments mean that you are able to stay home and recuperate without being concerned about meeting bill payments.

The Work Capability Assessment, Department for Work and Pensions, July 2010

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