Not sure if you have enough reasons to have income protection? Well, taking out a mortgage is one of the biggest financial commitments that most people make in their lifetime. With this in mind, it’s crucial to consider how you would meet your mortgage payments and your everyday cost of living if you were unable to work due to illness or an accident. This is where income protection insurance comes into play. With the current statutory sick pay (SSP) being only £109 per week (as of 2023) and fewer employers offering extensive sick pay benefits, this is a huge reason to have income protection.
What is income protection:
Income protection insurance, also known as IP insurance, is a type of insurance policy that pays out a regular income if you’re unable to work due to illness or injury. This type of insurance is particularly important for those who have taken out a mortgage, as it provides a safety net in case you’re unable to meet your mortgage payments.
In the UK, income protection insurance is becoming increasingly popular. According to research by the Association of British Insurers (ABI), more than 2.2 million people in the UK have income protection insurance policies. This is a positive trend, as it means more people are taking steps to protect their financial future. However, this doesn’t change the fact a huge proportion of the UK doesn’t have any cover in place, leaving them financially at risk should things go wrong in life.
5 reasons to have income protection:
- Protecting your home: Your mortgage is likely to be your biggest financial commitment, and your home is probably your most significant asset. Income protection insurance can provide you with the peace of mind that you’ll be able to meet your mortgage payments, even if you’re unable to work due to illness or injury.
- Peace of mind: Knowing that you have a safety net in place can provide you with peace of mind. You can rest assured that your mortgage payments will be taken care of if you’re unable to work due to illness or injury.
- Flexibility: Income protection insurance policies are flexible and can be tailored to meet your specific needs. You can choose the level of coverage you need and the length of time you want the policy to pay out for.
- No need to rely on savings: If you don’t have income protection insurance, you may need to rely on your savings to meet your mortgage payments if you’re unable to work. This can put a strain on your finances and deplete your savings. With income protection insurance, you don’t need to worry about this.
- Peace of mind for your loved ones: If you were unable to work due to illness or injury, your loved ones would be the ones who would be most affected. Income protection insurance can provide peace of mind for your loved ones too, as they know that your mortgage payments will be taken care of.
In conclusion, there are many reasons to have income protection insurance. It provides a safety net in case you’re unable to work due to illness or injury and gives you more financial reassurance you will still have money coming in every month towards the mortgage and bills, until you are fit to return back to work.. Don’t underestimate the importance of income protection insurance – it could make all the difference in protecting your home and financial future.
If still unsure if that is enough reason to have income protection insurance, LV have a risk reality calculator which can look at the statistical chances of certain events happening based on a client’s current age, retirement age and smoker status. They pool information from the Office of National Statistics and look at claims data to give an overall chance of life events occurring.
Want to find out more about income protection and other insurances available when buying a property, you can find more in our insurance section.