Every Friday we aim to post an answer to a FAQ about mortgages, tax, investments, money matters, business or retirement. You can have your say too. Send an email with your FAQ to [email protected]
This does not constitute advice and advice should be sought in all instances before acting on it.
Q. Which should I choose, life cover or income protection?
Answer: It can be confusing to know what type of protection is right for you as there so many options available. It may also be something that you do not want think about, but at some point, you have to plan for the future if something does happen to you.
This does not constitute advice and advice should be sought in all instances before acting on it.
A couple of options are Life Cover and Income Protection.
Life cover
Life cover pays out a defined amount of money to your nominated beneficiaries (usually your spouse or children) after your death or on the detection of terminal illness.
Income protection
If your job is your livelihood, i.e. you are self-employed, and if you were unable to work and thus not able to pay your mortgage or cover essential outgoings, income protection can pay out up to 75% of your earnings if you are unable to work.
Which is best?
If you have the budget to afford both, this will provide with substantial protection.
However, if you can only choose one, and if you have dependents, life cover is pretty much essential.
If you don’t have dependents or have just purchased your first property, income protection can offer valuable cover to ensure your financial commitments can continue to be met in the event you are unable to work.