Mortgage and Protection Adviser Bob Walker discusses..
In a recent public survey by Which Money, just 9% said that they had ‘some form’ of income protection compared with 41% who have life insurance and 16% who have private health insurance.
Scary statistics, but when you consider that over your working lifetime, your cumulative income could be worth far more than your car, your house or its contents, it just shows the anomaly in the market place. In the blink of an eye, most people will insure these tangible assets, but without an income, you would struggle to carry on paying these, let alone your continued household bills and living expenses.
Why is it that income protection falls dramatically in people’s priorities? Is it the lack of knowledge, the perception of cost, or the fear ‘that they never pay out’?
If it is the knowledge shortfall and the cost factor, then more and more insurers are promoting this need area more, with household insurers and specialists actively ‘tweaking’ their products to make them more accessible and appropriate to customers’ needs.
Where cost is concerned, as it is statistically more likely that you will be off work through sickness rather than the risk of you dying, it makes sense that income protection would cost more than life insurance.
Historically, with the term of an income protection plan running to an end date usually in line with anticipated retirement, they were cost prohibitive. Now, however, insurers are offering alternatives to ‘full term’ plans with 5 year and 2 year alternatives. By limiting the length of the time a claim is paid, it significantly effects the cost. Added to this is the fact that you can choose the amount of cover needed rather than having the maximum permissible and if there is a finite budget available, the benefits can be tailored to this as an another option.
With regards to claims, insurers publish their individual statistics and as an example Legal & General paid 95% of claims and Holloway friendly a whopping 98% in 2018 an increase of 2% on last year.
Clearly income protection should be at the top of people’s priorities list not the bottom, especially with the advancements we have seen. We can guide you through this important advice process and give you quotes specific to your needs and budget.
If you’d like to find out more, contact our team on 01638 551476 for impartial advice.
These plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.