You will be familiar with the term Income Protection, and may even have the cover yourself, or know someone who does.
Income Protection is a long-term insurance policy that can pay out if you are left ill or injured and unable to work.
It can cover loan protection, accident and sickness cover, redundancy protection and mortgage cover. You can also claim as many times as you need to- while the policy lasts.
However, this type of cover has previously been less popular than other insurance products available.
Although income protection is recommended for any adult of working age, a survey by Which? found the following:
- 9% had Income Protection
- 41% had Life Insurance
- 16% had Private Health Insurance
But why? When 1 million workers a year find themselves unable to work due to a serious injury or illness.
If you have children or dependants, are self-employed or employed without sick pay, you may be more likely to need income protection. In any case, if illness would mean that your outgoings would not get paid, it is definitely worth considering getting income protection insurance.
As the COVID-19 pandemic hit, there was a nationwide increase in the number of income protection enquiries being made.
An increase in excess of 1000% income protection enquiries were reported by insurers in March alone, reflecting the uncertainty and true fear of illness and redundancy amongst the public.
The cost of income protection will depend on:
-Your job and how risky it is
-Whether you smoke currently or previously
-The percentage of income you’d like to cover
-The waiting period before the policy pays out
-The range of illnesses and injuries covered
-Your health (including current health, your weight, your family medical history).
For anyone that currently has Income Protection insurance pre COVID-19 outbreak, it is more than likely that the insurer will pay out for coronavirus under their terms and conditions.
However, if you are thinking about getting cover now, the terms and conditions may have changed for new customers, so you may not be able to claim for coronavirus- especially if you’re only ill for a short while or are self-isolating.
It’s not for everyone. If you can get by on just your sick pay, government benefits or your savings, income protection might not be of value to you. The same applies if you have a partner or family that could financially support you, or if you were able to take early retirement.
But then another issue arises. It may not be just a physical struggle during these times, but a mental one also. The Global Web Index claims that 54% of adults in the UK said their mental health has worsened during the pandemic.
But it must be remembered that mental health issues can strike at any time- luckily, some income protection plans can cover this. LV= has recently revealed that 29% of income protection claims were for mental health.
It’s true that mental health and financial help have a connection- of almost 5,500 people in a Money and Mental Health survey, 86% said their financial situation has made their mental health worse.
Whether or not you currently have an income protection plan, it is safe to say that the current climate really has shaken up the way people see the world.
People value their time with friends and family more, they have realised how nice freedom was and how they may have taken things for granted. But also, they have found that their life can be changed quite drastically in such a short amount of time.
This abrupt global change which lead to sudden illnesses and redundancies has made it too late for those affected without income protection.
Hopefully, more people will notice the importance of income protection going forward. This includes all those of working age. So if anything like this was to happen again, it would one less thing to worry about during these stressful times.