Income protection and critical illness policies provide financial protection when circumstances change unexpectedly due to unemployment or illness. “If you lose your job unexpectedly then income protection can provide a regular source of income until you find work again,” says our founder Monica Bradley. “Critical illness provides cover in the event that you are unable to work due to illness. Sadly, over the years, we’ve had a number clients who have developed serious illnesses and had to give up work. The stress of having to cope with an illness can be debilitating for families but the added pressure of having to worry about money at such a devastating time is something that can be avoided altogether if you have the right critical illness cover.”
What is income protection?
Income protection replaces part of your income if you are unable to work if you become ill or disabled, or if you are made redundant and unable to find a new job. If you claim, you receive a regular income every month. There are options in terms of how much you spend and the extent of the cover – some policies entail paying lower monthly premiums and receiving money for a shorter term such as 12 months (meaning a proportion of your salary is paid monthly for a year). Other policies may cost more per month but cover you until you are able to start working again, until you retire, or until the policy ends.
“Income protection is not just for those who have a mortgage, it will also cover the cost of rent or monthly bills,” says Monica.
You can also take out income protection if you are self-employed to protect you if you were unfortunate enough to go out of business.
There’s often a waiting period before you start receiving income protection payments. The longer you are prepared to wait, the lower the monthly premiums. It’s worth considering whether some of your savings could cover the waiting period. If you have limited savings, you may want to pay a higher monthly premium and have a shorter waiting time before you become eligible to receive an income.
The cost of an income protection policy varies depending on your age, job and the percentage of income you’d like to be covered. Your health is also taken into consideration.
What is critical illness cover?
Critical illness cover is a long-term policy covering serious illnesses which pays out a one-off lump sum if you develop an illness such as cancer, multiple sclerosis, heart attack and stroke. This payment can cover your mortgage, rent or any alternations needed to your home should you develop mobility issues.
It’s important to seek advice to make sure you get the right type of cover for your personal circumstances. Please feel free to give us a call to discuss your requirements.