Nobody wants to think about losing their income but if it were to happen, what would you do? Would you be able to live on your savings or your benefits? Income protection insurance might be able help if your answer is no. Income protection is a type of policy that will replace part of your monthly income if you cannot work because of accident, sickness or unemployment.
So who would need it? Well, it is probably most important for people with a family, a mortgage and other types of debt. If you have financial commitments like these, losing your income may mean you have to make some lifestyle changes that you don't want to have to do, like downsizing to a smaller house or cutting back on holidays and other luxuries. If you were able to survive on your partner's income, then income protection insurance might not be for you. But if you would have to rely on government benefits, looking into a policy might give you extra peace of mind about the financial security of your family.
Other people may benefit from income protection insurance too. Single people with no dependents probably do not want to take out a life insurance policy, which pays out after they die. But income protection gives you money if you cannot work, which you can use however you deem fit. Perhaps people could use it to meet rent payments, pay for shopping or even just help them recover in financial security if they suffered a long term illness. Government benefits do not come to much, so it is certainly worth investigating if you feel that you fit into this category.
People who are worried about the recession should perhaps consider redundancy insurance instead of income protection, because this pays out if you become unemployed through no choice of your own. With redundancy insurance you will be paid the benefits for a maximum of 12 months, or until you return to work. At times of a recession this might provide you with essential peace of mind about the state of your finances.
These are all important reasons why people take out income protection, but for more details you should speak to an expert adviser to see how this sort of insurance could work for you. Many policies can be adapted to fit within different budgets and suit a variety of needs. In addition, there may be restrictions which you need to bear in mind before you take out a policy. This can include things like pre-existing conditions, or having knowledge of an upcoming redundancy before taking out a policy. Just as there are advantages of this types of insurance there are disadvantages too, so make sure you are aware of them before splashing out your cash!
Author Resource:
Chloe writes for ActiveQuote.com , where you can compare income protection online, as well as health insurance quotes
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