We all like to think we’re invincible, but the truth is, life is unpredictable. What happens if you’re unable to work due to illness or an accident? How would you maintain your current lifestyle and meet financial commitments? In the UK, the answer for many is income protection insurance. In this blog, we’ll delve into why income protection is not just a ‘nice-to-have,’ but rather an essential part of your financial planning.
Income protection is an insurance policy that pays out if you’re unable to work due to illness or injury. Unlike critical illness cover, it isn’t restricted to specific conditions. You can typically cover up to 65% of your pre-tax income, and payments are made on a regular basis until you can return to work or until the policy expires.
1. UK Statutory Sick Pay (SSP) May Not Be Enough
While employers in the UK are obliged to offer Statutory Sick Pay (SSP) for up to 28 weeks, the current rate is £96.35 a week (as of my last update in September 2021). This is unlikely to cover your mortgage or rent, bills, and other living expenses.
2. Peace of Mind
When you’re ill, the last thing you need is the stress of financial uncertainty. An income protection policy can give you the peace of mind that comes with knowing you can maintain your current standard of living, even if the worst happens.
Income protection policies can be tailored to fit your needs, whether you’re a freelancer, business owner, or an employee. You can adjust the level of cover, the waiting period before payments start, and the duration for which the policy will pay out.
4. Cover for Mental Health
Many income protection policies in the UK also cover periods where you’re unable to work due to stress or mental health issues, a factor that is becoming increasingly relevant in today’s fast-paced world.
When it comes to income protection, one size definitely doesn’t fit all. At Riviera Mortgages in Torquay, our advisors can help guide you through the maze of options to find a policy that suits your unique needs and circumstances.
Whether you’re a high-earning professional, a contractor, or a stay-at-home parent, income protection insurance is an important safety net that can provide financial stability in times of need. It’s an essential component in any comprehensive financial plan.