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Reviewing your 2013 finances? Don't forget income protection

If you couldn't work, would your family be able to pay the bills? If not, then you need income protection.

 

by Michelle McGagh on Dec 17, 2012 at 13:53

Reviewing your 2013 finances? Don't forget income protection

Tis the season to be jolly, rack up loads of credit card debt and have a close look at your household finances to ensure you’re better off in 2013 than you have been over the past 12 months.

The end of the year is the time when many of us take the chance to review our spending, making new year’s resolutions to be more thrifty and top up our pensions. But while you’re counting the pennies and trying to cut costs, there is one thing that you should definitely be shelling out for: income protection.

For those not in the know, income protection is an insurance policy that pays out a monthly income it you can’t work because of illness or injury. Many people have mortgage protection insurance to cover their mortgage if they can’t work but what about all the other day-to-day costs of living?

Income protection means that you’ll be able to cover your food bills, heating bill and MOT for the car.

None of us like to think about not being able to provide for our family and most of us believe that ‘it won’t happen to me’ but the truth is that one in five people go on long-term sick leave during their working life.

And for those who think that the government will look after them, think again. According to insurance broker Drewberry, government support amounts to just £5,200 a year on average, or £100 a week, which won’t cover most people’s bills.

The government can’t afford to put its hand in its pocket so we’re going to have to cover our own backs. Drewberry has launched a campaign to help promote income protection and show you just how much of your monthly expenditure is at risk by failing to put in place this straightforward and relatively inexpensive product.

You can check out the campaign and tools on the Drewberry website.

Illness and accidents do not discriminate and details of real life claims from insurer LV= shows the important of income protection:

A 31-year-old male carpet fitter who was brain damaged in a traffic accident has claimed £303 a month for 15 years, a total of £55,449 so far.

A 43-year-old male accountant who had a cyst removed from their brain has claimed £3,194 a month for the past seven years, totalling £255,520 so far.

A 46-year-old female vet who has arthritis has claimed £369 a month for the past 12 years, totalling £51,291.

These stories are a depressing reality but income protection can stop them being a financial disaster. So when you’re looking at your budget for 2013, think about how your family would cope if you couldn’t work. Times are tight but there are some things that are worth paying for, and peace of mind is one of them.

5 comments so far. Why not have your say?

JohnW

Dec 17, 2012 at 21:44

Whats the difference between this and PPI??? Both say "We'll pay out if you fall on hard times" About the only difference is that one you buy from choice but the other was buried in the small print!

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Rose G

Dec 18, 2012 at 09:38

The insurance industry preys on people's insecurity, very seldom actually paying out claims without trying to renege on it!

CPP is now being targeted as yet another payment the financial services has used to make money for nothing - I have paid for this for year's now, yet it is now being said that the protection buys you nothing you are not already covered for - what a load of leeches banks & their closely related insurance salesmen are!

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Anonymous 1 needed this 'off the record'

Dec 21, 2012 at 11:27

The company I work for has income protection. After I'd been there for a year + I developed MS. my HR dept thought it would be easy for them to claim on the income protection, but the company (insurance), has not been very forthcoming and just making wild guesses in the wind. 3+ years we are still waiting for them to come back to us...

Everyone knows it doesn't for the many i.e they will always find a get out clause, so how much did the writer get for this piece?...

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Mark Lance

Dec 23, 2012 at 11:27

Most insurance is a con and pays over half in commission it preys on your insecurities and your lucky if on average you get a benefit of 20% of what you pay at.

Theirs even some insurance that is underwritten at claim , so usually they happily take your money and on potential claim , you then find out you weren't eligible.

Unless its home or car insurance that you need, your normally better putting your money in An ISA and making sure you have savings your in control of AND IF THE UNLIKely doesn't occur then rather then wasting your money on insurance you then have savings

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Anonymous 2 needed this 'off the record'

Dec 30, 2012 at 18:39

I believe RDR does not apply to Income Protection, i.e. the seller will still get commission for the sale. Thus we should expect IFAs to push this type of product and can also look forward to the next misselling scandal in a few years time!

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