There are many people who will go to great lengths to protect their capital assets by insuring their homes and taking out life insurance etc, but they don’t exercise anything like the same care when it comes to protecting their income.
If you are one of these people you should try asking yourself how well you would cope if you found yourself the victim of an accident or critical illness. Whilst the advances in modern medicine may mean that you will eventually make a complete recovery, it may be many months before you would be able to work again, and you may never be able to return to the same job. Your financial health could therefore be in serious jeopardy.
The same also applies if you are unexpectedly made redundant. Those who have been in the same job for a long time may feel comfortable in the knowledge that they will get a sizeable redundancy payment to tide them over, but it tends to be exactly these people who have the greatest outgoings to pay for each month. .As a result of feeling secure in their job, many of them will have taken on huge mortgages and possibly other commitments such as school and university fees.
Whatever savings you have available are unlikely to last too long. Indeed in almost all cases they will be swallowed up by the mortgage payments within a few months, not to mention other essential items like power bills, food and travel expenses. So deciding to economise by not going out much or by cutting back on luxury items is never really going to solve the problem.
False Sense Of Security
One of the main reasons that people fail to take sufficient actions about income protection is that they wrongly believe that the State can be relied upon to bail them out in their hour of need. But the so-called "safety net" never allows anyone the privilege of doing anything more than existing. The exact amount you will receive will depend on your individual circumstances but, unless you have a very large number of children to support, it is most unlikely to be anywhere near what you could earn by working.
Income Payment Protection Insurance Can Help
It is possible to at least partially protect yourself against such a problem by taking out Income Protection, which will pay out a monthly benefit if you are unable to work as a result of sickness, accident or involuntary unemployment.
If you buy the product from a specialist income protection insurance broker it can cost as little as £5 a month per £100 of monthly cover required. We can even offer offer involuntary unemployment and incapacity (e.g.: accident and sickness) or critical illness cover separately at a reduced cost if you feel that you need this additional cover. Talk to us now for more details.