As people’s work and livelihoods are at greater risk with the impact of coronavirus, more and more are looking into a type of insurance which can protect their income.
The fact is that you are likely to need income protection and life insurance sooner or later.
What exactly is income protection?
It’s easy to understand the role of life insurance. It pays out a cash lump sum if you die. If you don’t have any dependents you could make a case that you don’t need it just yet – although at Continuum, we might not quite agree.
However, income protection is rather different – because it will protect you, rather than any loved ones.
Accident and illness can strike at any time – even in our 20s. Logically, they will be more common than premature death. We expect to recover, but if they led to us being off work for any length of time, they could have a serious financial impact. Income protection insurance could provide a replacement of a proportion of your monthly income from the insurer until you were fit enough to go back to work.
Short-Term Income Protection policies, or Accident, Sickness and Unemployment cover, will pay out for one or two years. Most Short-Term Income Protection policies can also include cover if you are made redundant.
Long-Term Income Protection obviously provides longer term cover. It can bring you a regular income if you are unable to work due to illness or disability until you are well enough to return to work, or until your retirement age.
As well as the financial benefits of cover, most income protection policies provide speedy access to treatments such as counselling or physiotherapy to help people recover and ideally get back to work.
Do you need cover?
Income protection might seem like a good to have rather than an essential, but there are sound reasons to consider it as soon as you start your career.
With money coming in, you will start to have financial commitments. A home of your own, even if it is rented. A loan for a car, perhaps.
Having cover means that a proportion of your income will be covered thereby reducing the financial impact of being unable to work through illness, subject to the terms and conditions of the relevant policy.
It is also important to consider income protection when you start buying your home. If you can’t keep up the mortgage repayments, your home, and your investment in it could all be lost.
Another reason to get cover may be when you find a partner. Two might be able to live as cheaply as one, but most prefer not to, and many couples soon find they are dependent on each other to meet their outgoings. If one were to be hit by unexpected illness, having protection in place could mean keeping a home.
Life assurance as well as income protection are important to consider, for example, if you have a partner who would be adversely impacted financially in the event of your illness or death or vice versa.
What are the costs?
At Continuum, we know that the cost of the cover will vary based on many factors. The more you get paid in your employment the more cover you will need to provide a replacement income.
But your age is also important and protection is subject to an assessment of health. The risks to your health are typically lower when you are in your 20s and 30s. This means that by coming to Continuum in your 20s, it is a good opportunity to review your individual needs and circumstances with regards to protection.
Of course, there are other factors to consider such as your profession will influence premiums. It is vital to get the level of cover you need – but it is always important not to pay too much for it. This makes expert advice an important consideration to identify your individual needs and circumstances.
At Continuum we want to help arrange all-round financial security for our clients, with a combination of policies tailored around your needs, and designed to protect your income, your health, your possessions – and your loved ones.
If you are in your 20s – or even if you are rather older – it makes sense to call us about arranging your personal protection plan today.
Insurance is based on an assessment of the health of the applicant and is unlikely to cover the applicant for previous or existing medical conditions. Please refer to policy documentation and seek advice in order to understand what the policy does and does not cover before making an application
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
Your home may be repossessed if you do not keep up repayments on your mortgage.