It's likely you insure your car, your home and even your life, but should you also insure our income?
If you weren’t able to work for an extended period then you may find it hard to meet your financial commitments such as your mortgage or household bills. So, taking out personal or mortgage income protection could be essential if you want to ensure you can always pay your bills.
The benefits of income payment protection
If you were unable to work due to accident or illness or you were made redundant, you may find that your income reduces significantly. Income protection insurance redundancy cover provides additional financial support to help you through a difficult period for a set period of time.
You can choose the amount of income protection cover that you need (within limits) and whether you want to cover yourself for accident, sickness or redundancy (or all three). You can also often choose what ‘deferred period’ you take.
What to look for when you compare income protection cover
When you are looking for the best income protection policy it’s important that you shop around before you buy. There are significant differences between the various policies on the market and so you should compare the quality of the cover that is offered as well as the monthly cost.
Firstly, you should check any limits or restrictions that apply to the income payment protection policies you are comparing.
Many policies have a minimum or maximum age while others will also have a maximum annual benefit provided by the policy. This is particularly important if you earn a significant salary and you want to ensure your standard of living can be maintained.
As well as this, when you research an income protection quote you should establish the maximum percentage of your income that can be covered under the policy. This varies from insurer to insurer and is typically around 50 to 65 per cent of your income.
You should also carefully choose what ’deferred period’ you choose on your income protection cover. This is the amount of time you have to wait before you can claim on your policy should you find yourself unable to work. You can normally choose a deferred period of 4, 13, 26 or 52 weeks.
A longer ‘deferred period’ will generally make your premiums cheaper but it also means you have to survive on your own savings or resources for longer before the policy kicks in.
You should also look at how long the policy will pay out for and thoroughly check the terms and conditions to ensure you will be able to claim if and when you need to.
For this reason when you're looking to take out income protection insurance you need to take a realistic look at your finances and decide how much cover you'd need and after how long. Balance this with affordability by shopping around for the cheapest policy that meets your requirements.
Once you've done this you can start
