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The low-down on protection insurance
You’ve possibly not heard the phrase ‘protection insurance’ before, but we’re sure you’ve heard of car, pet and home insurance? Protection insurance works in a similar way but looks after arguably your most important asset. Here we give you the low-down on everything protection, we’ll explain what it is, the different types of product, and how much it costs to get protected.
- What is protection insurance?
- What are the different types of protection insurance?
- What type of protection insurance do I need?
- How much does protection insurance cost?
Just like other types of insurance, protection insurance is there to help when unexpected things happen. You buy your home insurance to cover the costs of restoring your property if it gets damaged. You buy car insurance to help pay for vehicle repairs if you get into an accident. And you may even buy pet insurance to cover any unexpected or emergency vet bills for your furry family member.
These types of insurance focus on protecting your possessions, but what’s more important than all of these things? You. Protection insurance protects you and your family from illness and death - things that no one likes to think about. But we should, because sadly illness and bereavement are realities that many of us can expect to face.
There are three main types of protection insurance that it’s worth knowing about:
- Life insurance You’ve probably heard of life insurance. It pays a tax-free lump sum if you die during the period of time that you’re covered. There are different types of life insurance, including those that cover you for a set period of time, say 25 years, and those that cover you for your entire life, like whole of life insurance and over 50s insurance. There are also level and decreasing policies, where the amount of cover either stays the same or reduces over time. These types of policy are great for mortgages, as well as replacing lost income to cover household bills when you’re no longer around.
- Critical illness insurance Critical illness insurance is a type of product which is normally added to life insurance policies. Just like life insurance, it pays you a tax-free lump sum amount of money, but only if you fall ill with one of the conditions covered on the policy. At a minimum, critical illness insurance policies will cover cancer, heart attack and stroke, but many now cover around 50 different conditions including organ transplant, deafness and blindness. This type of insurance is useful if you fall seriously ill and need to take time off work. The payout can be used as you like, but often helps to cover the family bills and even pay for private medical treatment.
- Income protection insurance You may not have heard of income protection insurance before, but it’s a really useful product. It replaces your income if you fall ill, or have an accident, and become unable to work. The product pays out a monthly amount and continues to do so until either you recover or retire. Income protection insurance means that you can take the required time off work for treatment and recovery, whilst continuing to pay all your household bills as normal.
The type of protection insurance you need will very much depend on your personal circumstances. For example, if you own a home and have a mortgage and a family, life insurance and critical illness insurance may be the best products for you. On the other hand, if you’re single and currently rent a property, you might want to think about income protection insurance.
Once you’ve decided on the protection insurance product that works best for you, you’ll need to choose how much cover you need. This will depend on a number of things, including whether you have savings that you’d be happy to use. It will also depend on the level of financial support you get from your employer, and how long you get that support for. You might also have investments that provide a regular income, which could help if you were out of work.
These are all things you’ll need to think about if you decide to take out a protection insurance policy. But don’t worry, our expert advisers are on hand to help. They can work out exactly which product is best for you and the amount of cover you need, based on your specific circumstances. Call us on 0800 316 7253 to chat about your life and needs.
The cost of protection insurance will depend on a number of things, including:
- Your age
- Your health
- Whether you smoke
- How long the policy lasts
- How much cover you want
- How many illnesses are covered by the policy, in the case of critical illness insurance
- Your job, in the case of income protection insurance
As a simple rule, the more likely you are to make a claim on your policy, the more expensive your cover will be. So, the younger you are when you apply for your policy and the healthier your lifestyle, the lower your insurance premiums will be.
In general, life insurance tends to be the cheapest protection insurance product, followed by critical illness insurance, with income protection insurance being the most expensive. This is because people are less likely to die than they are to fall ill. As an example, a 35-year-old man is almost six times more likely to fall ill and be unable to work for at least two months, than he is to die before retirement*.
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Katie is an independent insurance consultant who is passionate about protection and wants to share that passion with others through engaging marketing content. She hopes that one day people will get as excited about protecting themselves and their loved ones, as she does!See all articles by Katie Crook-Davies
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