Income Protection - To cancel or not?!

linuxpenguins

Morning all

I trust everyone is keeping well.

I'm after a little 'advice' - I use the word loosely and completely understand that no one on here can provide me with actual advice. I suppose a more suitable word would be; 'opinions'.

Ok. So a little about my query. I will try and provide you all with as much information as possible.

Details of Policy:
Policy; Income Protection
Provider: Royal London
Premium: £28.12p/m

Finances:
Savings: £2.5k
Mortgage: - £66k (£3.5k reserve built up)

Employment:
Sick Pay: No

I am also saving roughly £500p/m

In short.. Do I really need this policy? In addition, there is talk that my employer may soon be providing sick pay.. but not too sure how long that would take.

My other outgoings are rather low as my parents fortunately pay my bills, council tax etc.

Keen to hear your thoughts

PS. Touch wood I am in as good a health as can be expected for a 32yr old non smoker, casual drinker (rarely lately!):beer:

Thanks all

horseymchorseface

you will be kicking yourself when you cancel it and you need it. It really depends on your circumstances and whether you have dependants e.t.c

dunstonh

In short.. Do I really need this policy?

Your income is likely to be your biggest asset. You insure your house, your car and possibly a number of other things (phone, cat etc). So, do you think your income is important to you and what would happen if your income was to stop?

In addition, there is talk that my employer may soon be providing sick pay.. but not too sure how long that would take.

The most generous employer sick pay schemes pay no more than 12 months. Most are 1-3 months if you are lucky.

PS. Touch wood I am in as good a health as can be expected for a 32yr old non smoker, casual drinker (rarely lately!)

And income protection is cheap for you. Try buying it in your 40s and see the price difference. It becomes nearly unaffordable in your 50s.

Nearlyold

How long do you have to be off work ill before income from the policy kicks in and how much income does it provide. What is your usual net monthly income from your employment

ACG

I am a big believer in income protection.

Lets assume you have 12 months full pay at work (I do not know anyone who has 12 months full sick pay). It looks like you have 2 months income saved at best plus maybe 3 months worth in your mortgage.

Lets say you can cut back and drag that out for 12 months.

You are fine for 2 years....Then what?

That is what you need to think about.

I had some stats a while ago that said the average claim on income protection was for around 6-7 years.

Your 32, the same age as me. You have maybe another 30+ years of working to look forward to. Anything could happen during that period.

It makes no odds to me if you keep it or not, but £30 a month especially with your parents covering your bills is peanuts, yet it could make a massive difference should you need it.

If things are that tight, cancel the sky? Order that one less take away or change your phone to a sim only contract? Income protection could end up paying for all of those things in the future.

Chris_Pollard

You seem to be prudent and sensible with money. I'm sure if you had a Cash Machine in your home that chucked out a couple of thousand pounds a month, you'd insure that.

You are that Cash Machine. It is a relatively small expense for the peace of mind that should anything awful happen you would receive income. Sadly your current health is no indication of the future. I did some analysis whilst working for one of the largest income protection firms - 70% of their claims in the first year came from customers who were accepted at "standard rates" - i.e. they were just fine when they took the policy out.

Keep it - and even if your employer does provide a scheme, many people retain the scheme on the basis that jobs aren't for life, and if you change jobs, you'll probably have a waiting period before you're covered. Better to be self sufficient than dependent on others - I think.