Choosing The Right Income Protection
More people in the UK insure their pets rather than their own health. But, sadly, 2.2 million people of working age will be off work for at least six months because of sickness and disability and State Benefits often aren’t enough to rely on.
Income Protection insurance provides a regular tax-free income – under current UK legislation – if individuals can’t work because of illness or disability. David Thompson from Income Protection specialist dg mutual offers his top tips for choosing the right cover:
- How would you cope if you lost your income? Firstly decide whether you need Income Protection. You’re unlikely to need this insurance if you have substantial savings but be realistic about how long your savings would last.
- Cancel your other policies! Which? recommends Income Protection as the one product that most of the working UK needs, so think about whether your Critical Illness and Payment Protection policies are benefiting you
- What can you afford? Work out how much income you’d need if you could no longer work. Remember that a small amount of cover is better than nothing at all.
- Do your research Make sure you’ll be protected against common causes of long-term absences amongst dentists, including stress and back problems.
- What’s in it for you? Does the policy provide you with more than just peace of mind? For example, if you choose a Holloway product from a Friendly Society, you’ll receive a share of the company’s profits when you retire, regardless of how many claims you’ve made.
- How often does the company pay out? Look into a company’s claims history. If a provider has a claims payout rate of over 90%, it’s usually a good sign.
- How soon would you need to receive your income? – Choosing to defer the length of time before you receive a payout usually makes your monthly premium cheaper. But, do consider how you would cope financially.
- Get the right product Get information from companies who specialise in Income Protection, an Independent Financial Advisor or find out more about Income Protection from Which?