Income Protection – is it a luxury or necessary expense?

The most common response we get from client during discussion about income protection is ‘I don’t think I need this.’

Those who opt against taking income protection policies tend to believe it is an unnecessary expense. A large part of the conversations revolve around them being fit & healthy and not planning to get unwell; the main priorities are always to insure the house, car and even mobile phones, but why not protect the most important thing that pays for it all – your income?

Think about your own personal scenario and what would happen if you lost the ability to work through sickness or injury (temporary or long term)? What would be the first thing that you would struggle to pay for, your house or your car?

An Income Protection policy is there to replace a proportion of your regular monthly income should a medical emergency / situation occur due to which you are unable to continue working as normal.

How many people of working age do you know who have been diagnosed with cancer or another serious illness? You might know someone who has broken a bone and cannot carry out their role effectively and had to stop working for some time? How would you (and if you have a family to support) manage financially should you be unable to work through illness or injury? If we think about our life and surroundings, the chances of having an accident or being diagnosed with a serious illness can be high.

An Income Protection policy would pay out a monthly set amount, tax free to pay those mounting bills and living expenses until you recover and are able to return to work. Many policies also offer rehabilitation to assist you in getting back to full health, e.g. counselling or physiotherapy as part of the policy.

It’s always great to live in the here and now as nobody has a crystal ball to predict the future. What we do know, is that things can change very quickly in life and this can often be life changing.

Remember: You can’t take out insurance when you actually need it. You need to already have policies in place to provide a safety net to fall back on.

 

Published May 2024

It is important to take professional advice before making any decision relating to your personal finances. Information on this page is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for information purposes only.