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Long Term Income Protection

Long Term Income Protection

13 Jan 2021

It’s natural to want to feel as safe as can be for as long as possible. Buying life insurance products can feel a little like buying peace of mind, as these products are designed to protect you when you’re vulnerable. Different types of cover are designed for different situations. You need to weigh up which situations you think would be the most detrimental to you and your loved ones and find a policy that protects against that. Many people choose income protection as not being able to work is their biggest worry. 

According to the ABI, (Association of British Insurers) a staggering one million workers a year find themselves unable to work due to a serious injury or illness. Income Protection is there to cover you if you find yourself as part of this one million. 

How does income protection work? 

One of the biggest differences between income protection and other types of policy is that income protection pays in monthly instalments rather than in a lump sum. Income Protection replaces a percentage of your salary (usually 50-70%) if you get injured or fall ill and can’t work. You’ll be able to set the percentage of your salary you want replaced when you buy your policy. 

You’ll also need to set a deferral period, which refers to the length of time between making a claim and beginning to receive monthly payouts. The longer the deferral period, the cheaper your monthly premiums will be. 

Most policies cover conditions and injuries like strokes, certain types of cancer, heart attacks, spinal and head injuries, and loss of limbs.

The cost of income protection also relies on a few other variables like many other life insurance products. The cost of your premiums will be based on:

  • The percentage of your salary you want covered
  • The length of your deferral period
  • Your lifestyle (your job and your hobbies)
  • Your current health and medical history

How long does income protection last?

Income protection can last as long as you need it to. It works by replacing a percentage of your salary every month until either:

  • You recover and go back to work
  • You reach state pension age and retire
  • The pre-agreed term of your policy ends and you stop paying premiums
  • You die during the period of the claim

Income protection won’t pay out when you pass away, but that’s what Life Insurance is for.  

When you buy your policy, you can decide how long it lasts. If you want income protection for a long time, you can buy a policy to suit this. You can choose if the policy ends at retirement, or at a certain age. Retirement is a common option (as of course you’ll no longer have an income to protect) as is waiting for mortgages to be paid off or for children to leave home.

Who needs income protection?

Really, anyone who relies on their income to get by could benefit from income protection. However, unlike other protection products like life insurance that are there to shield your family from financial issues after you pass away, income protection is important even if it’s just you. Even if you’re a family of one, you’ve still got food to buy, bills to pay, and a life to live. If illness and injury leave you unable to work and you can’t pay bills you might be in a sticky spot whether you have other people depending on your income or not. 

For people with savings or good work benefits, Statutory Sick Pay (SSP) might be enough to get by on. It’s important to work out if you could survive on SSP (currently £95.85 per week for up to 28 weeks) and any savings you might have. If you think you’d be okay living on your SSP or savings indefinitely, or if you could fall back on government benefits or your friends and family, then it might not be a priority for you. 

Whilst it’s true that anyone who relies on their income could benefit from income protection, it’s most vital for self-employed people. Without SSP to fall back on, self-employed people are immediately vulnerable the second they become unable to work. 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 as long as you keep your premiums up to date . 

Consider protecting the life you love today. The team here at LifeSearch are only a phone call away if you need a little guidance finding the right life protection products and policies. Contact us or give us a call on 0800 316 7253

 

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