Income Protection Insurance - Is It worth It ?

gareth1979_2

I just want to know if it's worth taking out income protection?

I am married with 2 kids and in rented accomodation with a gross salary of £2333 per month. I'm in a small company of only 2 people - director and me. My job is not that secure and I've been quoted £32.80 per month to insure myself against sickness/accident/unemployment.

This would give me a monthly income of £1500 per month for 12 months starting 31 days after I become unemployed - my job is quite specialist but during this time I should be able to find alternative employment. My current net income from this employment is just over £1700 per month and we have no savings.

Any advice would be much appreciated.

damage2008

Hi,
Things I would concider:

Your job is specialist, does that mean that there won't be many jobs of that type around so therefore harder to find?

Would you have to move you, your wife & kids if you had to get a job in a different location?

You have no savings, what would happen if you did lose your job and could not find another one for 6 months?

lrr_2

i got it when there were some rumours about jobs cuts where i used to work and so glad i got it! especially if you have a mortgage

LittleVoice

How insecure is your job? If there are just the two of you in the business, do you (or would you be presumed to) know of real problems in the business? If you actualy know that your job is about to be made redundant then insurance taken out now could well not cover you.

Start building your buffer savings. Use ISA accounts which pay a good rate and easy access as starting points for yourself and your spouse.

gareth1979_2

Thanks for the advice, it may well take longer than 6 months to find employment at anywhere near the salary I'm currently on. There has been no real indication that redundancy is on the way but being a small company I'm a bit nervous that if we don't get any big contracts in before the current ones come to an end there may be no reason to keep me on. So there should be no problem with any insurance company paying out if I take out the premium now. From your responses I think it may be worth considering. I've not got a mortgage but would still need to pay for somewhere for my familly to live while I find alternative employment. I do have loan commitments of around £230 a month though.

lrr_2

for income protection to be valid you have to be employed for at least 90 days from start of policy to making a claim and no redundancies declared in that time. if you lose your job within the 90 days they will not pay out till then. after the 90 days then you lose your job you make a claim on the 30th day. thats what my policy was like anyway. hope this helps. my policy paid out £800 per month for a £20 per month payment. well worth it. and also you can claim jobseekers allowance (contribution based only) for 6 months.

gareth1979_2

Thanks Irr, I'm alright for the next 90 days at least. The policy I've been quoted for will pay out after 31 days. If I am made redundant and am at home, my wife can work and I can look after the kids until I can find a decent job. As she doesn't work or claim benefits at the moment, we'd probably be better off in the short term. Everyones a winner!

lrr_2

no problem glad to have helped. ps the one i was with was called antinsurance which was the cheapest at the time