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Income Protection (IP) is an insurance policy that provides you with financial safety if ever you get sick or injured and are not able to continue working. It aims to help workers and their families maintain a good and similar level of living in case a family’s breadwinner became unfit to work.

Your IP insurance provider pays you out after a specified time or your deferment period. The covering of costs will then continue depending on what type of policy you got, either a short-term, which runs for one to two years or long-term income protection. 

With the long-term policy, your insurance provider will continue to pay you until you become fit to work or you retire, whichever is applicable. You should receive your IP one or twelve months after the incident, depending on your policy. However, you should take note that the longer the deferment or waiting time, the cheaper the plan will be.

As IP aims to keep families financially stable, payments are typically between 50 to 70 per cent of your income earnings. To date, IP payments are tax-free, which makes it even more beneficial.

What are the benefits of Income Protection?

Many people make the mistake of getting insurance only once they have children or taking out a mortgage. The problem with that is that illnesses, and other similar incidents, can happen anytime, and it can significantly affect you and your family’s financial stability.

With IP insurance, it ensures that you are financially covered, in case of sickness or injury. At the same time, you can reap many benefits in the long run:

1. You can maintain you and your family’s standard of living
2. You can pay your bills and daily expenses
3. You can ensure a stable future
4. You won’t need to cut costs for leisure activities
5. You won’t need to compromise your desired lifestyle

What is best about IP insurance is that it helps you ensure your everyday living because you won’t need to worry about your daily and occasional expenses, such as:

• Mortgage or rent payments
• Food and water supplies
• Household energy, utility, and, maintenance bills
• Medication and treatment for your condition
• Childcare and education costs
• Car loans

Should you opt for Income Protection insurance?

Whether or not you have dependents, sudden sickness and injury can cause severe financial burdens. Other than not being able to enjoy the lifestyle and leisure activities that you had, but you may not be able to pay your regular billings as well. In fact, financial experts recommend that every worker avail of income protection, even when their financial standing is secured.

Although you may think that you are secured with the earnings and saving you have today, these may not be sufficient for long-term needs. With that said, here are a few points that you should consider:

• Savings – although you may have enough savings, it may not be sufficient for your long-term needs. Also, savings should be spent on matters that will help grow your financials, such as businesses or investments, and not for expenses alone.
• Government benefits – these can help cover some of your health medication and treatments, but it doesn’t secure your financial stability.
• Employer sick pay – the number of sick benefits you get from your employer will depend on your contract and their offered coverages. In most cases, these aren’t sufficient for the long term.
• Support from a partner or family – it would be helpful to get financial assistance from your loved ones, but you shouldn’t put the burden on them as much as possible.

Conclusion

Income protection insurance helps you maintain a stable financial standing. It covers your billings and pays income support on events that you got sick or injured and become unfit to work. The advantage of IP insurance is that it allows you to enjoy your standard of living even after an unfortunate event. If you want to secure your future and financial stability, you should cover yourself and secure your benefits with income protection insurance.

If you need assistance with wealth management in Cardiff, we are here to lend a hand. Our expert and trusted financial agents will help you with your financial protection and insurance for the benefit of you and your family’s future. Get in touch with us today to see how we can help!

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