The COVID-19 pandemic and the current cost of living crisis has highlighted how important it is to build financial resilience. But it can take a lot less than a global crisis to interrupt your earnings. Ill health or an injury could keep you off work for longer than expected. If you have a mortgage or rent to pay, or children who depend on you, this could put you in a vulnerable position. IP insurance provides a safety net by paying out a monthly benefit to replace a loss of earnings until you get back on your feet.
Here are four reasons to consider taking out an IP insurance policy……
It’ll take the pressure off while you recover The most common health conditions cited for IP claims are musculoskeletal, such as back pain, and mental health conditions like stress and anxiety, which aren’t always easy to snap back from. Even if you are eligible for sick pay from your employer or Statutory Sick Pay (£109.40 per week for up to 28 weeks¹), considering the average UK household spends £528.80² a week, you may struggle to maintain your standard of living. IP insurance can support you for the long-term: for the length of the policy or until you can return to work, whichever comes first. The sum you’ll receive is usually based upon a percentage of your earnings and is not subject to income tax. If you are self-employed and not entitled to SSP, IP insurance can cover you for a significant percentage of your net profit. The maximum benefit you can claim is usually based upon your annual income over the past three years.
It’ll protect your hard-earned savings We all know that we should keep around three months’ essential outgoings³ in an emergency savings pot to tide us over tough times. But if your earnings are derailed due to sickness or injury beyond this, any money you’ve squirrelled away, such as a house deposit or family holiday fund, may end up taking a hit too. Your insurance specialist can run through your household budget with you. Seeing your outgoings in black and white can shine a light on how easily your savings could be eroded.
And help keep you out of debt It may be easy to max out the credit card or ask your partner (if they are working) to take out a loan, getting into debt isn’t an ideal way to prop up a drop in earnings. There are IP insurance policies available that provide cover from day one of you being off work.
You choose when it kicks in Even if you are eligible for sick benefits, IP insurance kicks in exactly when you need it. IP policies have a choice of a waiting period before the money is paid out, so you can decide when it becomes active to suit your individual circumstances.
To arrange a free, no obligation telephone consultation to find out if Income Protection insurance may be suitable for you, contact us on 01276 581896 or email info@vertuprotect.co.uk
Sources
¹ UK government: – www.gov.uk/statutory-sick-pay
² ONS – www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure
³ MoneyHelper – www.moneyhelper.org.uk/en/savings/types-of-savings/emergency-savings-how-much-is-enough?