One of the biggest threats to achieving your financial goals could be outside your control – the loss of your income.
If you could not work due to an accident or illness, or were made redundant, having income protection insurance gives you that extra financial support for a set period dependant on your policy.
You pick the amount of cover you need, deciding whether you want to be covered for accident and illness, redundancy, or both and if you need to protect your mortgage repayments, your salary, loan repayments or rent.
The maximum tax-free benefit available through an income protection policy is usually limited to around 60% of your normal income, although there are policies available to cover non-working parents or those with low or variable incomes, for example the newly self-employed.
Income protection should not be confused with payment protection insurance (PPI) which has come in for a bad press recently due to mis-selling by banks and loan companies. Although PPI can be a good product if set up correctly, for many people an income protection policy would provide a much better level of cover for a similar or even lower premium.
It is particularly important to consider Income Protection if you are self-employed, as your income could stop almost straight away if you were unable to work. Those who are employed should check their company sick pay arrangements, as many companies provide just a few months’ sick pay or statutory sick pay only (currently £81.60 a week).
For further advice or to arrange a free, no-obligation financial review, contact Emma Greer; tel 07885 407604 or e-mail [email protected].