Income Protection Insurance/Plans

sunshinesadly

Hi, having done a quick search I'm struggling to find anything on MSE about income protection insurance. I'm self-employed and looking for an insurance that will pay out a small sum each month to cover my basics should I get too sick to work. It's a minefield out there! Any pointers to helpful information, where to find the policies much appreciated!

HappyMJ

sunshinesadly wrote: »

Hi, having done a quick search I'm struggling to find anything on MSE about income protection insurance. I'm self-employed and looking for an insurance that will pay out a small sum each month to cover my basics should I get too sick to work. It's a minefield out there! Any pointers to helpful information, where to find the policies much appreciated!

If you're out of work due to illness or injury you can claim Employment and Support Allowance. It doesn't pay much though but should be enough to cover your essential day to day bills.

If you pay rent Housing Benefit will pay the rent and if you pay Council Tax CTR will pay most of the council tax.

If you have a mortgage you should be entitled to a payment holiday (usually after 12 months of payments you can usually have a month off - always request it). Further payments would be increased to account for the payment holiday. You can also switch to interest only for a short period of time. After a year on interest only you could consider selling.

If you've got a vehicle on HP and you are so ill you can no longer use it you may wish to look at returning it. Once you're well enough again you can get another one.

Most IP policies have a period of time you need to be sick for before you can get payment. You can get quite a low premium by setting the benefit amount lower and the waiting period longer.

Personally I self insure this by holding 6 months of expenses as savings despite having debts. In the event of illness I could last quite a long time with state benefits as my only income before needing to make any changes to my expenses. I could last until retirement.

dunstonh

Hi, having done a quick search I'm struggling to find anything on MSE about income protection insurance.

Do remember that MSE is not a good source for insurance information.

I'm self-employed and looking for an insurance that will pay out a small sum each month to cover my basics should I get too sick to work. It's a minefield out there!

It is a product that is mainly retailed via IFAs. Quote comparison sites dont like it as its mainly a paper/manual application. So, they only retail the budget PPI version.

A local IFA is your best source.

sunshinesadly

Thanks for these comments, much appreciated. It seems there may also be a debate about whether these policies are worth having, although I'm not keen on living off benefits if push came to shove!

Weighty1

sunshinesadly wrote: »

Thanks for these comments, much appreciated. It seems there may also be a debate about whether these policies are worth having, although I'm not keen on living off benefits if push came to shove!

There should be ZERO debate as to whether these plans are worth having. For the majority of working individuals their income underpins their financially well-being and if their income is lost then their lifestyle, in many instances, will rapidly decline once any employer related benefits cease.

For that reason they should rank highly amongst insurance policies that are worth having.

On the basis that the majority of income protection providers (I'm talking long term, permanent health insurance type income protection here) pay out in excess of 90% of claims then they provide a good means of protect ones lifestyle in the event of illness/injury.

I'd rank their importance at least as highly as life insurance for most clients.

sunshinesadly

Interesting position Weighty1. As someone with no dependents I don't have life insurance but I can see it's necessity for those that do. Thanks for your views on this. I presume you have income protection yourself - how did you go about finding it?

Weighty1

sunshinesadly wrote: »

Interesting position Weighty1. As someone with no dependents I don't have life insurance but I can see it's necessity for those that do. Thanks for your views on this. I presume you have income protection yourself - how did you go about finding it?

I've got life insurance, critical illness AND income protection.......but I'm a protection specialist so practice what I preach!

If I was you I'd either ask for personal recommendations for an adviser from friends or family or try and find a company with a lot of positive reviews online.

ChemistDude

I used Life Search for mine. I contract and have a limited company so I needed a policy that would count dividends towards my income (My company salary is basically the personal allowance).

For £2000/month worth of cover with a 3 month delay I pay ~£30/month to LV.
Premiums guaranteed (stay the same) till retirement.

I previously used PG mutual but they increase the premiums as I get older which after being with them for 2 years I decided I wasn't happy with that.

tacpot12

I agree with Weighty1 on the importance of this insurance. I reduced the cost by setting the deferred period to 26 weeks and the income amount to cover just my essential living costs. I also self insure by maintaining savings to cover six months expenses.

I found Aviva did a five year fixed deal that was much cheaper than other companies. Ideal for those of us within five years of retiring! ��