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Income Protection

Posted by on in Financial Services Blog
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I was disappointed but not surprised to read the results of a recent study showing only 7% of people insure their income which is less than the number who insure their mobile phone and pets. So why do so few people think that insuring their income is worthwhile?


I think the problem comes from the fact that none of us are very good at judging the probability of something happening and the resulting impact it would have. This makes assessing whether something should be insured very difficult. For example people can see lots of ways they could lose or break their mobile phone and being without it would be the worst thing ever! By comparison, many people believe they will never get sick or have an accident that will stop them from working. Furthermore, they believe if they were unable to work their employer or the government would continue to pay them so, its impact would be minimal. The reality is, according to Personnel Today, 300,000 every year people leave employment because of accident or illness, so it could well happen and when you factor in that the current rate of Employment Support Allowance is a maximum of £105.05 per week its impact would be huge!


A good Income Protection policy will provide a tax free monthly payment of half of your gross salary, either until such time as you are fit to return to work, you die or you reach your chosen retirement age. The policies have a deferred period, that being the length of time you have to be off work before it starts paying out and the longer the deferred period the lower the premium. A 30 year old administration manager, choosing a policy with a three month deferred period could have £1,000 per month of cover, payable until they are 65 for around £20 per month. That's about the same premium as insuring a cat and a smartphone. However, whereas the cat insurance and smartphone insurance may have a maximum payout of £5,000 and £500 respectively, the maximum payout from the income protection insurance is over £400,000!


If you receive an income that depends on you working surely you should have income protection insurance - if for no other reason than so you can keep paying your essential pet and mobile phone insurance!


For more information why not give me a call on 01903 821010, or email This email address is being protected from spambots. You need JavaScript enabled to view it.

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