finance article No.8517
Why Now is the Best Time to Buy Income Protection Insurance
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Insurance Underwriters are getting worried. The drip feed of ever worsening financial news has exposed the Government's previously optimistic forecasts to be little more than political spin. Not such a problem for the insurers of houses and cars, but bad news if they offer policies for loss of income due to unemployment. Some people like to call this type of insurance redundancy cover or unemployment insurance, the name the insurance industry like to use is Income Protection. No matter what it is called, it has become progressively more expensive. Those Underwriters are about to hike their rates again with due regard to the expectation that unemployment will rise to over 3 million this year. With premiums likely to increase over the next few weeks, for the ordinary 'man in the street' it means there has never been a better time to buy Income Protection Insurance. Why Income Protection Insurance is increasing in popularity? Over the past few years the notion of a job for life has gradually disappeared. Many more people are being taken on for short term contracts and it is now common to move jobs every couple of years. When you are carefully managing your career you feel you are in the driving seat but what happens when redundancy suddenly comes out of the blue and you are left without a job? No work inevitably means no income coming in. Yes, you may be entitled to a redundancy payment and you may be eligible for unemployment benefit, but how are you going to cover your ordinary monthly bills and outgoings (and that's not to mention 'going out money') without any fixed income coming in? You may be in a situation where redundancy seems very unlikely. But what would happen if you suffered an accident or long term sickness that meant you couldn't work for six months? It is in these situations that Income Protection Insurance can offer very real protection against your drop in income if you are unable to work.
How much does it cost? The most popular benefit level chosen by iprotectinsurance customers is £1000 per month with premiums ranging from between £12 and £36 per month for people with ages ranging from 18 to 55. This would give you up to £12,000 of cover over a year. Depending upon the excess you choose, the average 35 year old customer pays between £18 to £26 per month for this level of cover. What am I covered for? If you are concerned about job security, with premiums rising, now is the time to buy Income Protection Insurance. Of course, if you have readily accessible savings, usually said to be equivalent to 6 months net salary, you have less to worry about. Regrettably, relatively few are in this envious position. Income Protection cover typically replaces up to 65% of your gross pay if you cannot work due to Accident, Sickness or Unemployment. This type of policy will pay out for up to a year for each valid claim. Most policies are subject to a maximum benefit e.g. £1850 per month, which is sufficient to pay the important monthly bills. Clearly, in the current economic climate, there has never been a greater need for people to think about this type of insurance. Acting quickly and not just thinking about it, could save you a lot of money.
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