When most of the world went into lockdown, countless families lost income. Income that they desperately needed to pay rent, buy groceries, pay school fees and a host of other vital monthly expenses.
Whilst lockdowns and social distancing reminded us that our greatest asset is our health, they also reminded us that one of our other significant assets is our ability to earn an income.
In the last year, we’ve helped many of our clients build back and recover from the financial duress of lockdown, and it’s important that we take a moment to discuss income protection.
We have dread disease cover and medical policies to help unburden us from the financial strain of sudden, large medical bills. But income protection serves another purpose. Much like the other policies, it helps us mitigate risk and provides peace of mind, but it also allows us to sustain the lifestyle we have become accustomed to after a traumatic event.
An income protection plan is designed to supplement your income with dependable monthly instalments when you cannot work due to illness or injury. The cover is based on a percentage of your current income, usually between 50% and 75%.
Income protection can last until the end of the policy term, until you recover, upon retirement if you are permanently unable to work, or upon death. Unfortunately, it is not as simple as needing income protection or not. Income protection can come in many different flavours and should be looked at quite carefully. For example, some policies will pay out if you are unable to perform your job due to illness or injury, while others will only pay out if you’re unable to do work of any kind. It’s a subtle difference, but a crucial one.
We can't predict when things will go wrong in life. But we do know that a broken leg won’t stop the bills rolling in. Having the right cover in place means there's a plan to recover from an unexpected financial impact. It is important to not only think about how you would cope financially if you were no longer earning a salary, but how it fits in as part of your overall financial strategy and risk plan.
Income protection lets you pay for your family’s usual living expenses and it lets you continue to invest in your future by allowing you to pay for your children’s education and save for retirement.
If you want to have a chat about income protection insurance then let’s get in touch.