Is it worth having income protection insurance?

Is it worth having income protection insurance?

6 Jul 2021

It can be easy to shrug off life insurance products as unnecessary. After all, no one wants to believe that they’ll get sick. However, with nearly a million people off work sick per year and 27,275 income protection claims made in 2019, it’s undeniable that sometimes, illness and injury is inevitable.  

When considering what life insurance products you might need, it’s easy to get bogged down in the details, or try to cover yourself from every possible angle. In an ideal world we'd be covered for everything.... but one or two policies can work for some individuals - and these may be different for each individual. However, there are very few people who couldn’t benefit from income protection. Even single people with no family have bills to pay and costs to cover, and being signed off from work could be detrimental. 

Let us break down why it’s so worth having income protection insurance

What is income protection?

Finding yourself unable to work because of illness or injury can be financially devastating, especially if you’re the main breadwinner in your household. And, with hundreds of thousands of people being signed off from work due to illness per year, it’s definitely a threat to take seriously. 

Income protection is designed to cover you if you fall seriously ill or get injured. It’s there to ensure that if you’re signed off from work sick then you can still bring home the bacon. Income protection will usually provide between 50% and 70%. You’ll continue to receive these payouts until you can return to work, or until you retire, your policy ends, or you pass away.

You’ll be covered for a variety of illnesses or serious injuries that cause you to be unable to work. You’ll be able to discuss exactly what you’re covered for when you buy your policy, so you know you’re covered how you want to be covered. 

When it comes to premium costs, there will be some variables to take into account. Prices will range from one insurer to another, but almost all insurers will take the same variables into account, like: 

  • Your age
  • Your health
  • Your lifestyle, job and hobbies
  • Your smoking status
  • The percentage of your salary you want to be covered for
  • The length of time you want to be covered for

Another thing that will be taken into consideration is the deferral period. This refers to how long it’ll take between you making the claim and beginning to receive your payout. The longer this period is, the cheaper your premiums are likely to be. When thinking about your policy, consider how much sick pay you get from work and how long this would payout to you, how long would your savings last (and would you want to use this), plus Statutory Sick Pay (if you’re eligible for it). The longer you think you’d be alright without an income, the longer you can set your deferral period when you buy your policy. 

Why is income protection so essential?

Every life insurance product is designed to cover you in different ways. Many people choose income protection over other types of policy, or alongside life insurance. When buying your insurance, it’s vital to weigh up what you need from your policy. 

Many people choose income protection for the following reasons: 

  • Income Protection pays out in monthly installments, rather than a lump sum, which makes the money easier to manage.
  • They don’t qualify for Statutory Sick Pay. Whilst there are ways to receive support from the government like an Employment and Support Allowance, many people don’t qualify, and benefits change over time, whereas a policy is a contract that will protect you as arranged for the whole of the agreed time period. 
  • It’s far more likely to be signed off of work sick than it is to die before retirement. 

Income protection is one of the most-claimed types of protection, with nearly 100% of claims approved.  

As said, there are actually very few people who wouldn’t benefit from income protection. If you’re a single homeowner with no dependents, no mortgage and a large chunk of savings, you may manage fine without in the short term.

However, it’s fair to say that most people don’t fit this description. If you’ve got monthly outgoings, you need a monthly income, and this is what income protection is there to secure for you. 

Unlike other protection products which are targeted more at being a way to help your loved ones cope, income protection is as much about protecting the life you love as it is about protecting them. If illness or injury means you can’t pay the bills then you’ll be in a sticky spot whether you have other people depending on your income or not. 

If you need a little guidance finding the right life protection products and policies, the team here at LifeSearch are only a phone call away. Submit an enquiry or give us a call on 0800 316 7253. 


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