Working to earn money and having a regular form of employment is essential for the vast majority of us. The lucky ones among us will have a job we thoroughly enjoy. The rest of us probably just view employment as way to pay the bills, put food on the table and have some extra money to spend on luxuries.
Unfortunately, we never know what might happen in the future and an unforeseen event could prevent us from working. Even though there are ways to claim money from psychological conditions such as depression or a physical head injury, we can also safeguard against such events by taking out income protection insurance.
According to consumer group Which?, one industry survey worryingly showed that less than a quarter of people deemed income protection insurance essential, compared to the 74 per cent who believed access to broadband internet was more important.
While it may seem like an unnecessary expense, there are several long-term benefits that simply cannot be ignored. Here are five reasons why it is advantageous to have some sort of cover.
Guaranteed revenue stream
If you are incapacitated and therefore unable to work due to illness or an accident, income protection insurance will ensure you receive a regular source of money. The income will continue until your death, health recovery or retirement or when the agreed contract ends.
Your level of incapacity will be based on whether you can carry out your own or another form of employment. Activities of daily living such as dressing, washing, eating, shopping and cooking will also be contributing factors.
Better than other forms of cover
Alternative forms of protection such as critical illness cover and accident sickness and unemployment (ASU) insurance are available; however, these are not as comprehensive.
Income protection insurance is a long-term solution, while ASU policies typically only last for a year or two. Although large income protection pay-outs over a prolonged period of time will mean higher premiums, this type of cover will provide more revenue compared to alternative options on the market.
Better than government benefits
Even though the government strives to help individuals who cannot work because of injury or illness, the support provided may not be enough.
Income protection policies will provide at least 50 per cent of your regularly monthly income, a big difference to the standard state hand-out.
Reassurance for family, friends and loved ones
If you are unable to work, you may need some sort of constant care which can be stressful, time-consuming and expensive for your family.
With a guaranteed steam of income, your family can spend even more time by your side or be in a financial position to provide the best care possible.
Once you have taken out a form of income protection, your insurance company are not allowed to cancel or refuse to renew the policy on the provision that you continue to pay the premiums.
In addition, any money you regularly receive on a weekly or monthly basis will be free of tax.