19 August 2020
While our greatest asset is our health, one of our other significant assets is our ability to earn an income. There is nothing like the responsibility of monthly bills to motivate us to keep working.
But what happens when you are unable to work? Who will protect you for this eventuality?
We have dread disease cover and medical policies to help unburden us from the financial strain of sudden, large medical bills. But income protection serves another purpose. Much like the other policies, it helps us mitigate risk and provides peace of mind, but it also allows us to sustain the lifestyle we have become accustomed to after a traumatic event.
An income protection plan is designed to supplement your income with dependable monthly instalments when you are unable to work due to illness or injury. The cover is based on a percentage of your current income, usually between 50% and 75%.
Income protection can last until the end of the policy term, until you recover, until retirement if you are permanently unable to work, or until death. Unfortunately it is not as simple as needing income protection or not. Income protection can come in many different flavours and should be looked at quite carefully. For example, some policies will pay out if you are unable to perform your normal job due to illness or injury, while others will only pay out if you’re unable to do work of any kind. It’s a subtle difference, but a crucial one.
We can't predict when things will go wrong in life. But we do know that a broken leg won’t stop the bills rolling in. Having the right cover in place means there's a plan to recover from an unexpected financial impact. It is important to not only think about how you would cope financially if you were no longer earning a salary, but also how it fits in as part of your overall financial strategy and risk plan.
Income protection lets you pay for your family’s usual living expenses and it lets you continue to invest in your future by enabling you to pay for your children’s education and save for retirement.
If you want to have a chat about income protection insurance, do get in touch.