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How can Income Protection Insurance benefit carers?

Income protection is an insurance policy that makes sure you continue to receive a regular income and are able to meet your financial commitments should you be forced to take time off from work due to ill health.

If you can’t work due to accident or sickness income protection insurance will pay you an agreed portion of your salary each month. This will allow you to use this money to pay any bills or costs that you would otherwise be struggling to pay.

The best way to think about income protection is that you are your own most valuable asset. You may have insured your car, house contents, a mobile phone etc… but all these assets are only owned because of your ability to work and earn a living. Therefore, insuring your income should be the very first thing you do.

Income protection can be especially useful for carers due to the possible hazardous nature of their work, especially since the Covid-19 crisis. Carers were and still are expected to work on the frontline looking after vulnerable clients. However, if you’re working as a carer and should become unwell or suffer the effects of long-term Covid, income protection cover provides peace of mind that you will still receive a regular income.

How to receive income protection

In order to receive a pay-out, a claimant just requires to be signed off work sick by their GP as unable to do their own occupation. There are numerous conditions that can keep clients off work for extended periods of time, from mental health or muscular/skeletal conditions, to more critical conditions such as cancers, heart attacks and strokes. Whether your condition is short term or chronic/career ending, income protection protects you from the financial impact and allows you to focus on yourself and your recovery at what would otherwise be a very difficult time financially.

Types of income protection

There are two types of income protection – limited benefit and full cover. Limited benefit will, as the name suggests, pay out for a limited period of time. Historically this was 24 months, but a wider choice is now available with options ranging from 12-60 months. Full income protection does not have its maximum claim length capped, and if you never returned to work due to poor health, the plan would conceivably pay until retirement/the end of the policy. As ever, when taking advice upon this, a policy can be tailored specifically to your own budget and needs.

Sick pay alternative

The cornerstone of most people’s budget is their monthly income; the traditional ‘payday’, where our bank accounts are replenished and the bills, mortgage, council tax, utilities, food, and clothing etc are all paid. In the event that this income would cease, the financial shock has an impact upon all these areas very quickly. Those employed can benefit from statutory sick pay in circumstances such as long-term sickness, but with SSP set at just £96.35/week this is far too low a level for most people to be able to live off.

Whilst considered by many to be a complicated product, the reality is that income protection is quite straightforward and transparent. An individual can insure somewhere between 55-60% of their gross income, depending upon the insurer, as the benefit is paid tax free. A deferred period is set, that being the length of time that the client is off work sick before the benefit will be paid.

As with all policies such as this, speaking with a qualified adviser with access to the whole of market is extremely important to ensure that you end up with the best policy to meet your needs. Here at Fish Insurance, we have partnered with Watts Mortgage & Wealth Management who have a specialist team on hand to answer any questions you may have on Income Protection Insurance. Click here for more information.

For help, speak
to one of our team
call 0333 331 3770

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