Why you need Income Protection Insurance

It can help to protect your family from a financial crisis

Why you need Income Protection Insurance

When you feel secure in your job and are in good health, it's all too easy to overlook the need to plan for the unexpected. However, if you were to suddenly lose your income, you'd certainly wish you'd thought ahead.

Have you worked out how long you could cover your outgoings if you lost your job, fell seriously ill, or had an accident that stops you from working?

If you're self-employed, how would you be able to cover the cost of living?

It's no use just hoping for the best. We all stand a high chance of facing these sorts of setbacks during our working lives ...

Did you know?

• Did you know that overall, it is estimated that more than one in three people will develop some form of cancer during their lifetime (Cancer Research UK).
• It is estimated every six minutes someone in the UK dies from a heart attack (British Heart Foundation).
• 32% of people made redundant would fail to meet their current living expenses in the first month, with one in 6 defaulting immediately (TNS Onmibus).

How long could you manage without Income Protection?

Very few of us have the financial resources to cover the cost of living for long if we lose our main source of income. So ask yourself:

• How long would my savings last if I was out of work?
• If I lost my job, what redundancy package would I receive?
• If you're self-employed, do you realise how limited the support is from the State?
• If you're a homeowner, how long before your home could be repossessed?

No one likes to think about these unfortunate realities. But if thinking about them now helps you to make provision, you'll be glad you did if the worst happens.

Social Security benefits - the uncomfortable truth!

"How will we pay the mortgage?" is often the major worry when the household income is under threat. But you can avoid having your family home repossessed by making plans now.

Many people think the State will provide immediate cover for their mortgage repayments if they are in financial difficulty. Not so!

• You'll receive no assistance with mortgage repayments for the first 9 months of unemployment
• You'll receive no assistance towards the portion of your mortgage that exceeds £100,000
• You'll receive no assistance at all if your partner works more than 24 hours a week
• You'll be 'means tested', with no assistance at all if your savings exceed £8,000
• There is some limited financial help through the State Benefit System (Income Support for Mortgage Interest - ISMI) but it only applies to mortgage interest, not capital repayments, or other mortgage related out-goings such as insurance premiums
• ISMI is only paid at the Standard Interest Rate, which may not match the rate your mortgage lender is charging
• You'll receive no benefit at all if your National Insurance contributions aren't up-to-date
• Self-employed people can only claim state benefits if they have 'employee' status (i.e. if they're trading as a limited liability company OR as a long term contractor on the client's payroll)
  
  And if you earn an average of £87.00, or more per week... your Statutory Sick pay entitlement is only £72.55 per week!

Could you and your family survive on this?

Unemployment - more bad news

• In November 2009 the UK unemployment rate reached 2.46 million (ONS January 2010)
• 1,995 people are made redundant every day (Credit Action - February 2010)
• The average length of a claim for Unemployment is 168 days (ABI 2/9/9)
• 386 people today will be declared insolvent or bankrupt. This is equivalent to one person every 3.72 minutes.

helpucover Income Protection benefits:

• Monthly benefits of up to £1,500
• Monthly premiums from just 76p (per 100 of benefit per month)*
• Benefits paid for up to 6 or 12 months
• Award Winning Claims Service
• Back to Work Service

* Based on an 18-24 year old for accident and sickness cover