If you were unexpectedly unable to work, due to illness or an accident, how would you pay your mortgage and bills? Would you have savings you could fall back on? Could you rely on a partner, friend or family member to cover you? Or would you turn to credit cards?
Times are hard. We’re living through a cost of living crisis and money doesn’t stretch as far as it used to. But if you find yourself out of work, due to a stress-related illness, mental health or physical health condition, that’s where Income Protection could help to bubble wrap your income and help to potentially rid the stress that comes with keeping up with your mortgage repayments and bills.
“You wouldn’t think twice about insuring a ‘machine’ that churns out a hefty £40,000 a year in income,”mortgage adviser Jo Jingree says. “So why should it be any different, if that ‘machine’ was you?”.
No money = a source of stress
It’s easy to think finding yourself out of work will ‘never happen’. But current research, from the Office for National Statistics (ONS), shows otherwise. The latest ONS census shows that around 185.6 million working days were lost in a year because of sickness or injury, which was a record high.
Meanwhile a report, looking into health patterns in England, has projected that 1 in 5 of the population are projected to be living with major illness by 2040 — an increase of more than a third.
At the same time, a 2024 financial resilience report released by Royal London found that almost one in four 35 to 49-year-olds have no savings at all. While just under one in five of this group say they couldn’t cover any size of unexpected bill, no matter how big or small.
Defining Income Protection
If you’re employed, you might already get statutory sick pay (SSP) from your work. However, current SSP is only £116.75 per week and it can only be paid for up to 28 weeks. Or, you may be self-employed and have no sick pay at all.
Either way, Income Protection covers a certain percentage of your wages and steps up to the plate if you were unable to work due to accident or illness — like a broken limb. It ensures you get a regular income until retirement, death, or until your return to work, whatever comes first. “So essentially, income protection works for as long as you can’t” Jo says.
“That said, there are also short-term income protection policies available that last for one or two years, which are much cheaper than traditional income protection policies,” Jo explains. “So given that you are more likely to be off work due to a long term illness, such as diabetes, arthritis, or some mental health conditions, rather than passing away prematurely, this cover could provide peace of mind should you find yourself in a vulnerable position,” Jo adds.
Who could benefit from Income Protection?
In one word: anyone. But this type of insurance is especially well worth considering if:
- You live alone and therefore pay all the bills
- You are the only person earning an income in your the household, and therefore your wage is solely relied upon
- You are self-employed, a limited company director or a sole trader
- You don’t have sick pay
- You work in a sector that has high health risks
So, is it worth getting income protection?
It could be!
1. Income Protection = a weight off
Income Protection policies are medically underwritten and provide something we’re all after — and that’s peace of mind. So you could spend more time on getting better and less time worrying about how you’ll pay your mortgage, rent or food bills.
2. You could get more bang for your buck
Some Income Protection policies go the extra mile. Meaning? Along with helping you future-proof your income should you be unable to work due to accident or illness, many insurers provide value-added benefits when you take out Income Protection.
For example, some insurers may offer:
- Remote GP appointments
- Annual health MOT and access to physio
- Mental health support
3. You could tailor your Income Protection policy to you
Nowadays, a handful of insurers specialise in insuring those who work high-risk jobs, such as NHS workers.
For example, as an NHS employee, you may be entitled to up to six months at full pay and six months at half pay, depending on your length of service. But should you find yourself unable to work, there are insurers who will ‘top up’ the pay come the start of month seven.
Curious to know more about Income Protection?
Award-winning adviser Jo offers fee-free advice and won’t charge a fee for arranging protection insurance.
Along with answering any need-to-know questions, Jo can advise you on how much Income Protection you might need and find the right options for you and your personal circumstances. So do get in touch to book in a 30-minute consultation via phone to help take a weight off your mind.
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