Insurance can be a funny thing.
As a society, we don’t think twice about insuring a phone, a bike or a watch, all three of which are essentially made of either metal or plastic (or a combination of the two). But how willing are we to insure against our own health?
According to the Financial Lives Survey (2022), which was carried out by the Financial Conduct Authority, around only six per cent of the UK population has income protection. Conversely, research from Mintel, the global market intelligence agency, highlighted how 45 per cent of smartphone owners have cover for their device.
As a Maidenhead insurance broker, it’s not our role go into the whys and wherefores around why this is the case. However, as a team of Berkshire insurance advisers who found themselves scratching their heads at these two statistics, this article does present a good opportunity to flag this lack of appetite for income protection.
The benefits of income protection insurance
If you’re wondering ‘what does income protection cover me for?’, then you’ll probably be pleased to know that it pays you a regular income if you’re unable to work due to disability or sickness. Not only that, but payments can continue to be made until you return to work or retire.
Of course, the longer the period that payments cover, the higher the premium. However, with short-term income protection policies, the policyholder can reduce the premium by limiting payments to a one, two or five-year period.
If your next thought is well, it probably won’t happen to me, then you’re definitely not alone.
However, it’s worth pointing out that research from the ABI – the voice of the UK’s insurance and long-term savings industry – revealed how over 15,900 people claimed against their income protection policies in 2022, which represented at nine per cent increase from 2021. The total amount paid out was £231,000,000.
Now, with 15,900 claimants against a working population (those aged 16 and above) of 33.05 million*, your next logical thought might be that’s not that many people. And statistically, you might be right.
However, if you’re one of the 15,900 that are unable to work but need to pay the mortgage, bills and feed your family, then you might approach it differently.
Is income protection insurance worth it?
This all comes down to your appetite for risk. It also depends on how much your life costs to run, how much of the household income is reliant on you, and whether or not you can afford to cover your outgoings if your income stopped.
At the very least, it’s certainly worth exploring income protection costs and then comparing them against the cost of having no income.
Of course, everyone wants to sail through life without any hiccups. However, you never know what’s around the corner. As they say, by failing to prepare, you’re preparing to fail. With that in mind, our view is that everyone should get an income protection insurance quoteand make a decision from there.
Interested in speaking with our income protection broker in Maidenhead? If so, contact us on 01628 560820 or by emailing enquiries@altonmortgages.co.uk.