Income protection insurance
Income protection insurance safeguards your income if you can’t work due to illness or injury, ensuring you can cover essential living expenses and maintain your Get insurance adviceility
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Income protection insurance provides a replacement income if you are unable to work due to illness or injury.
While individuals typically prioritise medical and life insurance in their financial planning, income protection frequently gets overlooked. In fact, only 6% of people in the UK have an income protection policy.
However, your income is fundamental to maintaining your lifestyle, making its protection a top priority. Without it, an unforeseen event could significantly jeopardise your family’s financial security.
Do I need income protection insurance?
When you are healthy and working, it is easy to cover everyday expenses like food, utilities and other necessities.
But what would happen if a health issue prevents you from working and earning an income? While you may have savings, relying on them long-term is not ideal, especially with the rising cost of living.
Income protection insurance ensures that even if illness or injury prevents you from working, you will still be able to pay for the living expenses.
This means you can maintain your financial commitments, such as mortgage payments or your children’s school fees. This is particularly important given the growing financial pressures many families face today.
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What is income protection insurance?
Income protection insurance provides you with a monthly payout if you are unable to work due to illness or injury. It acts as a safety net, allowing you to focus on recovery without worrying about your financial obligations.
One thing to note is that income protection policies come with a waiting period before payments start. The longer the waiting period, the lower your monthly premiums will be.
How much income does it cover?
Income protection insurance typically covers 50-60% of your regular income, though this can vary depending on the provider. This percentage can be a huge relief when you are unable to work, helping you to retain a high standard of living without putting too much strain on your savings.
You can shop around for different types of income protection products, as they vary in price and benefits. To find the right fit for your financial plan, it is a good idea to consult a qualified financial adviser.
Cost of income protection insurance
The cost of income protection depends on several factors, including:
- Your age
- Pre-existing medical conditions
- The level of coverage you choose
The older you are or the pre-existing conditions you have, the higher your premium will be. Additionally, the number of conditions and injuries covered by your policy, as well as the percentage of income you want to protect, will affect the cost.
Income protection vs. other types of insurance
Understanding the differences between income protection insurance and other types of coverage is essential for creating a comprehensive financial plan.
Income protection vs. critical illness insurance
Both income protection and critical illness insurance provide valuable coverage, but they work differently.
A critical illness insurance policy provides a lump sum payout if you are diagnosed with a covered illness. In contrast, income protection insurance offers ongoing monthly payments during periods when you are unable to work.
These two types of insurance can complement each other in a comprehensive financial plan.
Income protection vs. disability insurance
Unlike the income protection cover, which provides ongoing payments, disability insurance gets you a lump sum of money if you are unable to work due to your permanent disability.
Choosing the right policy
Selecting the ideal income protection policy in South Africa can be overwhelming due to the wide range of options available.
It is essential to fully disclose any existing health issues during the application process to prevent claim denials. Additionally, reviewing your policy annually ensures it continues to align with your financial needs.
At Holborn Africa, we offer expert advice and tailored solutions to help you navigate the complexities of income protection insurance.
Our qualified financial advisers are here to assist you in finding the best policy that suits your unique situation and provides the financial security you need.
Frequently Asked Questions
Income protection insurance replaces a portion of your monthly income if you are unable to work due to illness or injury. It helps cover essential living expenses and provides long-term support.
