Securing your financial future: the importance of Income Protection Insurance

Imagine waking up one day to find yourself unable to work due to an unexpected illness or injury. Bills pile up, and the financial stress starts to take its toll. It is a scenario none of us want to contemplate, yet it is a reality that can strike at any time.  

• ONS Data shows that 2.5 million people were unable to work due to long term sickness in 2022. That’s 1 in 13 workers. 
• More than 1.6 million adults aged 50 and over are unable to work because of long term sickness. This number has increased by 20% in the last three years.
• Civil service reports that Mental Health problems is the largest cause of long-term sickness absence (42%), followed by Musculoskeletal System Disorders (13%).

Whilst there is some help from the Government through Statutory Sick Pay (SSP), but at only £109.40 per week, payable for up to 28 weeks, this won’t be sufficient to cover rent or mortgage payments, let alone bills.  And for those who are self-employed, there is no financial assistance at all. 

Can you rely on savings to support you? 

A recent study by Legal & General found that 22% of people surveyed said they had less than £500 in savings, 26% of people said their savings would be cleared out within 7 days, and 23% said they had no savings at all.  

So, if Government support and our savings are insufficient, what else should be considered.

Income Protection Insurance

Most people are aware of life insurance and critical illness insurance, and a large proportion of ‘employed’ people have some form of insurance through their employer which will pay out in the event of their death. But what if you were taken ill, or had an injury which meant you couldn’t work, how many of us have insurance against that?

Income Protection Insurance tends to be overlooked when taking out a mortgage, with the focus being on life cover, but when you think about it, protecting your income should be more of a priority.

An Income Protection policy provides a regular payment that replaces part of your income if you are unable to work due to illness or an accident. Policies typically have a specified benefit period, which can range from a few months, to several years, or even until retirement age. The cost of the cover can vary based on factors like your age, health, occupation and level of coverage you require, but it is not as expensive as you may think and you can guarantee peace of mind for you and your family until you are ready to get back to work.

If you would like to discuss your mortgage and income protection needs in more detail then please contact Nicki Sparks at Dentons Mortgages on 07469 097179 or 01483 959 349.