How Does Income Protection Insurance Work?
There are various insurance policies that could be used to protect your income in different circumstances. However, income protection is a specific policy that provides you with a level of income when you need it the most. So, how does income protection insurance work?
In 2023, the number of individual protection policies bought reduced by 5.5%, including income protection. According to The Exeter, 40% of people said that affordability was a priority when choosing an insurance policy. Also, 24% of those who cancelled an insurance policy did so because they had never made a claim. But not having income protection insurance is risky and could result in you not being able to pay your mortgage or bills.
Many people take out an income protection policy to ensure that the cost of their mortgage is covered if they are unable to work. Let’s explain how this works…
What is income protection?
How would you fund your living costs if you were signed off work for an extended period of time? If you are unsure, then you should consider the financial security offered by income protection. This type of policy can be valuable, especially if you find that you or your partner are unable to work due to sickness or injury.
Income protection insurance pays out a monthly income to protect your wages. It serves a different purpose to critical illness cover, which normally pays out a lump sum in the event of specific illnesses. In comparison, income protection will support you financially if you are unable to work due to any injury or illness. This type of cover will replace your earnings until you are well enough to return to work.
It’s worth noting that a critical illness policy provides a lump sum benefit only if a specified critical illness covered under the policy is diagnosed. For more advice on critical illness insurance, read our previous blog, Do you need insurance for illness cover?
Get income protection cover
Many people underestimate the importance of income protection insurance. However, not having this type of cover in place could result in you not being able to support your family financially. It’s also important to make sure you have a suitable level of cover too.
Interestingly, you don’t always have to make a claim to benefit from having a protection policy in place. Some insurers offer free advantages that you can benefit from, such as wellbeing support, discounted health checks and gym memberships.
At Bubble Finance Hub, we regularly speak to people who have inadequate insurance in place, which can have serious consequences. Our insurance advisers will talk you through the various types of policies and benefits on offer from different insurance providers.
Our team have whole of market access to hundreds of insurance policies. We will explain the terms and conditions of any policy in plain English. Our aim is to find suitable income protection insurance for you or your partner at an affordable cost.
For advice on income protection insurance, please get in touch to book an appointment.
As with all insurance policies, conditions and exclusions will apply.
Thank you for reading our blog, How Does Income Protection Insurance Work?
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