What is income protection?
Income protection refers to a family of insurance products which ensures that you can continue to meet your financial commitments; if you are forced to take an extended break from work.
Income protection will pay you a regular monthly benefit if you lose your earnings due to being unable to work because of illness or injury. It can be used to help pay your monthly mortgage instalments, pay your monthly bills that don’t stop, e.g. council tax, gas and electric, TV subscriptions; and maintain your family’s lifestyle, e.g. holidays, mobile phones and eating out.
Income protection is especially useful for people working in dangerous industries who want to be sure their mortgage will always be covered. Income protection only covers events beyond your control: you’re much less likely to be covered if you’re fired from your job or if you injure yourself deliberately.
Why do I need income protection insurance?
A minority of employers support their staff for more than a year if they’re off sick from work. Given the low level of benefits available, everyone of working age should consider income protection.
A public survey noted that just 9% said they have some form of income protection, compared with 41% who have life insurance and 16% who have private health insurance.
Millions of us have policies such as private health insurance and payment protection insurance; but the one protection policy every working adult in the UK should consider is the very one most of us don’t have – income protection.
How much does income protection cost?
Your health, whether you smoke and level of cover needed will weigh into your premium; but your type of job also plays a major part in determining what you’ll pay.
Many insurers group jobs into four categories of risk, some providers may have more; for example, jobs may be divided into the following groups:
- Class 1: Professional; managers; administrative staff; staff with limited business mileage; admin clerk; computer programmer; secretary.
- Class 2: Some workers with high business mileage; skilled manual work; engineer; florist; shop assistant
- Class 3: Skilled manual workers and some semi-skilled workers; care worker; plumber; teacher
- Class 4: Heavy manual workers and some unskilled workers; bar person; construction worker; mechanic
The riskier the type of job you have, the more likely it is that you may need to make a claim; meaning that those in the riskiest occupations tend to pay higher premiums.
Looking to buy protection insurance?
If you decide you need advice, make sure you consult an independent life insurance and protection broker.
Here at The Residential Mortgage Hub we offer impartial, no-obligation advice to provide you with the best life insurance, protection or mortgage insurance policy tailored to your individual needs.
Please don’t hesitate to get in touch for further protection advice or book an appointment here.
