Why You Should Consider Income Protection Insurance

Life has a habit of throwing us curveballs. That’s why income protection insurance (also known as IPI) is a good idea for giving you financial security when you need it the most. 

The Centre for Economic and Social Inclusion found that around 10.8 million working households would see a fall in their income by over one third if the main earner has to stop work due to ill health. That is 60% of UK working households.

With statistics like this, it’s well worth considering IPI.

What is IPI?

IPI is a type of insurance policy that provides you with a pay out if you find yourself unable to work due to illness or injury.

Generally, this policy pays out after you’ve been off work for 6 months. This period is known as a ‘deferred’ or ‘waiting period’. Some of the most common waiting period times are between 4 and 52 weeks. The longer your waiting period, the cheaper your insurance will be.

Why should you take out IPI?

Taking out an IPI policy is wise for anyone who wants to ensure their salary is covered, preventing falling behind on mortgage repayments, should you find yourself unable to work due to incapacity.

If you’re employed, your employer may offer their own sick pay scheme. These tend to be rather minimal and will see a decrease in your salary over time. At the most, many employer sick pay schemes only pay up to 50% of your gross income.

In contrast, an IPI can pay up to 80% of your salary until you return to work, pass away or reach retirement age, depending on what comes first and what your specific policy terms and conditions may be.

IPI offer you a wide range of benefits that other types of insurance policies like accident, sickness and unemployment insurance do not.

The costs

Your current state of health along with what sort of work you do plays a significant factor in dictating the cost of your IPI.

For example, if you smoke and work in a high-risk job such as heavy manual work, fireman etc., the cost of your IPI is likely to be higher than a non-smoker who works in a professional, office-based role.

Whatever your health or line of work, if you’re looking to get the most suitable IPI for you contact our Chartered Financial Planners on 01992 500261 or on enquiries@gpfm.co.uk.

This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.