Protecting your asset with Income Protection
For ultimate peace of mind in an emergency, don’t forget Income Protection Insurance when buying a home.
Income Protection Insurance serves as a financial safety net. If illness or injury stops you from working, this insurance provides an income. It’s usually a percentage of your pre-tax earnings, depending on how much cover you take out.
You want to ensure you can always repay your mortgage and cover the essentials. Your first step is assessing your financial situation. What are the most significant risks if you lose your job due to illness? Do you have three months of living expenses in savings? Or similar sick pay benefits from your employers?
Ultimately, whether it’s worth taking out depends on you. If you are self-employed and would struggle to pay the bills if you became unwell, then it is worth considering. Or if employed, and your employer only offers limited sick pay.
You may get access to statutory sick pay through the government if you’re too unwell to work. However, this is only £99.35 a week. Unlikely to cover all your bills!
Most people don’t know that policies can cover up to a set percentage of your income. E.g. 65%, or up to a set monthly amount, e.g. £2,000. Or you could find a policy that lasts for just a year or up to your retirement date. The longer the policy, the more expensive it is.
The cost of Income Protection Insurance varies. Factors like age, occupation, health status, coverage amount, and policy features. Someone in their mid-30s may pay an average £29 a month for Income Protection.
The Times reported that only 7% of British adults have policies. Compared to 10% with Critical Illness Coverage, and 24% with Life Insurance. Cost is partly the reason why Income Protection is less common. Income Protection tends to be more expensive than Critical Illness and Life Insurance. BUT because it covers a broader range of reasons. You are more likely to use this insurance.