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Roy Mason joins us on the next episode of the Mortgage & Protection Podcast to explain all about income protection.
What does income protection cover?
It’s essential insurance of your income and it typically covers up to about 60% of your gross income.
How does income protection work?
It’s designed to pay out if you’re unable to work due to having had an accident, an injury or any illness that stops you doing your job. You claim and it pays out in line with your arrangements. This will depend on how much, how soon and how long you’ve arranged your insurance for.
Does income protection cover self-employed people?
Absolutely, Self-Employed, Limited Company Directors, as well as traditionally employed people can all have this type of cover.
Will income protection cover me if I lose my job?
No, it doesn’t. It’s only designed to cover you in the event you’re unable to work due to having had an accident, an injury or illness.
What’s the difference between life insurance and income protection?
Life Insurance pays out a lump sum, typically once one of the policyholders has died or sometimes when they’re diagnosed with a terminal illness. Income protection is designed to pay out a sum each month until you return to work, the policy finishes, or you die.
Is it worth getting income protection insurance?
In my opinion it’s essential for everyone, because we all need an income to pay for everything we need to live. We recommend that everyone has it as soon as they’re earning because it also ensures that you’re ready to take on a mortgage.
How much should I budget?
It’s impossible to give an exact figure, because unlike nearly every other insurance, this is something that the client themselves has a degree of control over, so it will depend upon the individual’s occupation, income, age and health.
A number of other factors can also influence the cost, such as how much (up to 60%) of their income they want to cover, how soon they want it to start paying out in line with any sick pay, for example, and how long they want it to pay out for. Obviously the younger and healthier you are, and the less risky the occupation you have, the lower the cost.
What are the benefits of income protection?
Cover can be tailored to suit requirements and budget, unlike a lot of other insurances. A lot of providers also offer a range of additional benefits, because they want to help them get back to work if they’re claiming, so access to online GPs, physiotherapy services, counselling and a number of other benefits may be included.
How can a mortgage broker help if somebody is looking for income protection?
We’re essential, as, due to the nature of this protection, providers require that it’s arranged under advice. It’s not something a client can do themselves, so we would give advice to enable them to arrange the cover that suits their requirements and budget and source the cover from a wide range of different providers.