Income Protection Insurance : Should you Purchase?

income protection insuranceHere at Mortgage Style, we are not just one of Bristol’s leading independent mortgage advisors. We can also help you with other areas of your finances. One of these, which is actually not very well known to everyone, is income protection insurance. This type of insurance will protect you if you are off sick from work for a long period of time. But, to date, only 10% of working households in the UK take out this type of cover. So, should you bother purchasing? Read on and decide.

Income Protection Insurance : A Little Known Form of Security for your Family

Income protection is so little known, that less households have purchased it in the past than have purchased insurance for household pets! One of the reasons for people’s’ reluctance to buy this type of cover is that it is rather complex. But, that is where we step in. We don’t just sell insurance to you. We will talk through with you when you would be covered, how long you would have to wait for a payout, and how long your cover will last.

One of the complexities of income protection insurance is what actually constitutes being unable to work. This depends on a lot of different circumstances such as the job you do, and the injuries or sickness you have sustained. Some jobs are entirely off limits when it comes to this type of insurance, or will offer ridiculously high premiums. These would be jobs where you are in constant danger. On the tip side, a job where you are sitting at a desk is almost always accepted. But, how sick do you have to become before you can no longer sit at your desk?

Income Protection Insurance : What to Expect

When you take out this type of insurance, the general consensus is that you will be paid a regular monthly income until your retirement age or until you return to work. But, you need to be careful when deciding what type of policy to take out. If you want full cover, then you will need to take out a more expensive “own occupation” cover. Otherwise, you may be deemed fit for work, but in a job that requires no physical activities. So, say you work as a builder and have an accident on site.

If you have only a basic policy, you may find your payments stop when you are fit for an office job. This really is not much use to someone who has never worked in an office, and will find it impossible to find employment in such a setting. Other more basic policies will only pay out for a set maximum amount of time. Sometimes this can be as little as six months. So, is it really worth paying for something that you may never use or will only pay back for less than a year?

When taking out your policy, there will also be a deferral period.  In general, the longer this period, the cheaper the insurance. But, who is to say that you won’t suffer an accident at work the week after you take out insurance? No one can write your own future for you. It’s not like medical insurance where there are also deferral periods. If you have to take time of sick, then you cannot go without money until your policy kicks in.

Depending on the plan you take out, there will also be upper monthly or annual limits on payouts. Your insurer will also want to know great details about you, your age, your health, your work position, and their questionnaires can be as intimidating as those for health insurance. So, let Mortgage Style talk through your options with you, and in the case you decide to go ahead, we guarantee we will find the best policy for you.