The holiday insurance business in the UK is booming. Anyone who has lost a bag or had problems with hotels or flights will understand why. Yet in the grand scheme of things our holidays don’t take up much of our time and don’t last long either. It seems hard to fathom then why holiday insurance is far more popular than cover that would tide you over if you got sick and were unable to work.
Holiday cover is surely about inconvenience. We all look forward to our holidays so it makes sense to get cover. But why not also get cover that would provide short and long term cover if you suddenly lost your income? It’s potentially a life-changing inconvenience if you can’t cover your overheads.
This is very much a UK issue. Even in America people are more likely to have some income protection cover. The thing is, if you’re self-employed or an executive with no company cover, you can face real hardship if you are unable to work for any length of time.
The psychology of insurance is an interesting thing. When it comes to holiday insurance perhaps people are more inclined to take it out because they regard their holiday with more certainty. After all they have booked it. On the other hand the prospect of getting sick or ill has, in the mind of most people, no certainty about it at all.
But how wrong people can be?
In the UK, rates of serious illnesses are increasing rather than declining. It used to be the case that any one of us had a 1 in 3 chance of getting cancer. Now the odds are increasing. Dissonance is a terrible thing. No one likes to think of getting sick but it’s more a question of facing facts.
Income protection insurance will replace a proportion of your income if you are unable to work through sickness or ill health. And it will keep paying until you get better. It has a higher pay out rate than critical illness cover and will provide a monthly income rather than a lump sum. If you’re self- employed or have limited company cover it’s worth very serious consideration. Most people don’t have large savings. Therefore it’s hard to see how financial hardship can be avoided if you’re unable to work.