You may have Life cover and Critical Illness cover as part of your mortgage protection plans, but these policies pay out a lump sum if you die or fall prey to a critical illness. What protection have you got in place if you are unable to work for a while?
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Income Protection is an insurance policy that pays out if you’re unable to work because of injury or illness. It usually pays out until retirement, death or your return to work.
Why Income Protection insurance?
Life cover and critical illness cover policies are more popular with mortgage applicants than income protection, yet income protection can indirectly offer protection for your home too. An Income Protection policy ensures you’d be paid a monthly, tax-free income if you were signed off by your doctor and absent from work due to illness or injury.
These payments could be vital to your financial survival – helping you keep up with bills, mortgage payments, and childcare costs. It limits the risk of repossession of your home if you couldn’t pay your mortgage, and can prevent you having to downsize to manage medical and/or living costs.
Moving home unexpectedly can have far reaching effects. It could mean moving away from friends and family, being unable to stay in the same job, forfeiting securing the right school for your child, or unnecessary disruption of changing schools.
According to Which (2019), Income Protection insurance is the one personal protection product every working adult should consider buying once they become a homeowner.
Your savings can cover you – but for how long?
Most people rely on their salary to keep on top of monthly expenses. If you are the sole or main earner, then without an income you can be left in a challenging position when having to cover all of your monthly outgoings without a salary coming in each month. You may have savings you can dip into, but how long would that money support you for?
Income Protection insurance ensures you receive a monthly income for as long as you need to recover. So, even if you have to be off work for a lengthy period, you can protect both your finances and your family.
Aviva’s Protecting our Families report revealed that 20% of families who have lost the income from their breadwinner ended up downsizing because they simply couldn’t afford to stay in their current homes. 76% are not prepared if they lose their main source of income.
It’s never too late
Most people tend to think about taking out a plan when they go through a big life change, such as changing a job, getting married or starting a family. The best time to consider Income Protection insurance is as soon as you start full-time work, to ensure your finances are protected, but it’s never too late to take out a policy.
Put a protection plan in place
Think taking out another insurance plan will be too costly? With income protection you can choose from a wide variety of cover options, to ensure you’re not paying more than you need to. You can tweak options, like the term of cover, the amount of cover needed, and the payment period once claimed.
Get in touch with us today and we’ll work with you to find a plan to protect your future.
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