Updated: Nov 13
Owning a property is an exciting event but also one which brings with it certain financial responsibilities. As much as you may have saved for the purchase, if something unforeseen happens and you become unable to work due to illness or injury, it can put your ownership of that property in jeopardy unless you have taken steps towards protecting your income.
Income Protection Insurance will provide cover so that any mortgage repayments, household bills and other regular expenses are covered should something prevent you from being able to work. At a time like this when finances are stretched further than ever before, having this type of protection can be invaluable for first-time buyers and home movers alike. Here we explore why income protection insurance is a must-have for all homeowners and answer some key questions about how different policies operate and what coverage each offers.
What is Income Protection, and Why Do You Need It?
Simply put, income protection is a type of insurance designed to replace your income if you are unable to work due to an illness or injury. As a homeowner, you need income protection to ensure that you can continue to pay your mortgage and maintain your standard of living if you are unable to work. Without this insurance, you may find yourself struggling to make ends meet and could even face losing your home.
How Does Income Protection Work?
Income protection works by paying you a percentage of your income when you are unable to work due to illness or injury. Depending on the policy you choose, this could be up to 75% of your pre-tax income. The payments begin after a waiting period, also referred to as the Deferred Period (which you select when you purchase the policy) and continue until you can return to work or until your policy term ends.
Types of Income Protection Policies
There are two primary types of income protection policies: long-term policies and short-term policies. Long-term policies offer coverage for an extended period, often up to your retirement. Short-term policies offer coverage for a limited time, typically one to two years. A short-term policy would be a good option if you are looking to keep the cost down until you can afford to upgrade to a long-term policy.
It is essential to consider which option is best for you based on your individual circumstances and needs.
Choosing the Right Income Protection Policy
Choosing the right income protection policy is crucial. You must select a policy that covers your needs and provides the right level of protection. When choosing a policy, consider factors such as any existing cover you may have personally or with your employer, waiting / deferred periods, benefit periods and policy terms.
It is also essential to read the policy documents carefully and understand what is covered and what is not.
The Benefits of Income Protection
There are many benefits of protecting your income. Not only does it provide financial support in times of need, but it also offers peace of mind, knowing that you and your family are protected. It can also help you avoid debt and financial hardship, avoiding the need to selling your home if you fall on hard times. In short, income protection is an essential investment for any homeowner, and choosing the right policy can be the difference between financial security and hardship.
In conclusion, Income Protection Insurance could be one of the best investments you ever make. It provides protection and peace of mind in the event of unforeseen circumstances, such as illness or injury. You may be wondering whether you will ever require it, but if the worst were to happen, having income protection could be your best decision yet. The insurance provides a regular income, so that you will not have to worry about your mortgage repayments or household bills. It is reassuring to know that something like this is available, as it can give you peace of mind knowing that you are preparing for all situations - both good and bad.
If you would like further information on how Income Protection Insurance can make sure your finances are covered if you cannot work due to illness or injury, please get in touch with one of our experienced advisors today.
As with all insurance policies, conditions and exclusions will apply.