What is your biggest asset? Your income is by far your biggest asset. Without your income, you stand to put your lifestyle, mortgage repayments, holidays, etc., at risk. Income protection is not an insurance that many people have in place. This is despite the fact that income protection might be the most important insurance we could have.
What is income protection?
Income protection provides a replacement income should you be unable to work due to illness or injury. The premiums for income protection qualify for tax relief, meaning that the actual cost to you can be reduced by 20% or 40% depending on your marginal tax rate. The payment of the benefit from income protection would begin to pay out after a deferral or waiting period. If you have a sick pay entitlement from work, you can arrange the income protection to pay out after the sick pay ceases. Once a benefit payment starts, it will not stop until you are able to return to work or until your policy expires up to age 60 or 65.
Factors that affect your premium would be the length of the deferral period, your age, occupation and health. There is also the option of having a guaranteed or reviewable premium. The guaranteed premium will be a higher cost initially, but will not change throughout the entire term of the policy. The reviewable premium will be subject to change upon regular review throughout the policy, so while it may be cheaper initially, it could end up costing much more in the long run.
It certainly is an insurance that we should all be looking into, in order to protect ourselves in the event of being unable to work due to illness or injury. We must weigh up the cost vs. the security it would give us.
If you would like to discuss income protection, please let us know. We would be delighted to discuss your options with you.