- Salli Anstey
We all know that insuring our car, home, holidays and pets is just something that must be done, but when it comes to protecting our income if we’re unable to work, arguably the most important, less of us are properly protected. You may be surprised to find out, according to new research from Royal London, that 81% of us have no income protection at all.
If you, your children, partner or other relatives depend on your income to cover the mortgage or other living expenses, then some form of protection is vital should the worst happen. Here, we discuss the three main forms of protection available. Our expert advisers can help you compare all the options and help you choose the best protection for your finances based on your personal circumstances:
Life insurance, often something which is purchased alongside a home, pays out to someone you’ve nominated in the event of your death and is the most common form of protection. There are many different types of cover, some offering a lump sum regardless of term, others decreasing and linked to the mortgage.
Planning for the worst and how your dependents will cope financially is absolutely necessary but considering the now is just as important. Despite there being a much higher chance of being diagnosed with a critical illness or facing long-term absence from work, critical illness insurance, and income protection get significantly overlooked. According to Legal and General 15 million adults have life insurance which is more than both critical illness and income protection combined.
Critical illness insurance covers you financially in the event of a specific life-changing serious illness listed in the policy, often in the form of a one-off lump sum to enable you to keep up with mortgage repayments, rent and other living expenses while you’re not earning. It can be arranged alongside Life Insurance or as a separate policy.
Income Protection Insurance is designed to support you financially if you are unable to work due to an illness or injury paying you a proportion of your lost earnings as a monthly income so that you can cover your critical expenses while you’re unable to work. Some short-term policies can also cover you against redundancy.
The question is, do you know what your income would be if you were off sick for a long period of time? Your company may have a contractual policy in place, but for many, provided they qualify, relying on statutory sick pay of £92.05 per week (for up to 28 weeks) is the reality and is often not enough. If you have savings that you think may act as a safety net, have you considered how long these will last?
Falling ill unexpectedly can happen to anyone, and the financial impact it may have on you and your loved ones could be significant. Building a full protection solution tailored to your needs and budget is something our advisers have over 30 years of experience in.
Whether you feel like you’re currently not suitably protected, that you might want to prioritise critical illness cover and income protection over life insurance or you just want to discuss your options, contact us today. We provide a FREE, no-obligation consultation. For more info go to: Private Wealth Mortgages or call on 01403 270006 or email: info@privatewealthmortgages.co.uk.