Income Protection

SafetyGnome · 2 October 2018 at 11:44AM

Hello fellow Money Savers,

My partner and I are having our first child in little over a month. I am the sole earner for the household with about £31k in net income per year. I worry that, if I can't work due to an illness or a disability, my family will struggle. Does anyone have any advice on income protection insurance? For example, whether it is worth it or not? I do have life assurance through work and I do get six months full sick pay if I were to fall ill.

Any help would be greatly appreciated.

Thanks,
SafetyGnome.

Weighty1 · 2 October 2018 at 1:08PM

Is it worth it?................not if you live a long and healthy life with no long periods of incapacity.

If you are paralysed in an accident however, or suffer a stroke of are diagnosed with MS, get stress, chronic fatigue syndrome, fibromyalgia, parkinsons, a back injury/condition etc etc etc then YES, it's very much worth it

SafetyGnome · 2 October 2018 at 1:48PM

But what about support from the government. Say I didn't have income protection but I did have a serious illness/disability which resulted in me not being able to work, would I get any financial benefit from the government?

Thanks,
SafetyGnome.

dunstonh · 2 October 2018 at 2:41PM

But what about support from the government.

Do you realise how low that is? Someone on 31k a year would struggle with the limited Govt support. It would take you down to breadline level

kev2009 · 3 October 2018 at 9:11PM

i guess this all depends on how secure you think your job is and what the chances are of something happening to you? From what i briefly know of income protection, they only pay a % of your income you get now and you pay in each month. You also state how long you can survive without needing the month, from say 1 month to say 3 months. They then pay you the money for 1 year and then that's it - they don't pay you a fixed amount each month for the rest of your life or until you retire etc, its usually only for 1 year from what i recall unless things have changed now. Also the monthly costs can work out to £50-60 a month.

Also don't forget I believe you need to be in the plan for minimum of 3 or 6 months before you can claim and you must of joined not know about any potential job loss or anything.

This i just what i picked up a year or 2 ago when i briefly looked at it but I decided to built up an emergency fund myself and then worst case live off that initially, just so i didn't have that "how am i going to pay x this month" feeling, i wanted to be in a position to say ok, I've got x months to sort something out etc.

Kev

ACG · 3 October 2018 at 9:17PM

Have a look at Employment and Support Allowance (ESA).
I am not a fan of the daily mail, but have a look at some of the shocking stories where people have been declined ESA because they do not fit criteria - people with terminal cancer.

Is income protection worth it? Out of the 3 main insurance (Life, critical illness and income protection) the only one I have is income protection...I do keep meaning to look at life insurance but never get round to it.

Your whole life is reliant on your income - food, cinema, clothes, insurance, bills - if you lose it, you risk losing everything. Spending £20 a month would be £240 a year for 25 years would be just over £5k. I think it is worth it.

tacpot12 · 3 October 2018 at 9:43PM

Kev2009 is wrong about Income Protection policies only paying out for one year. It is normally the case that they pay out until your normal retirement age (or until you are fit to work again). They are one of the most important policies you can have, but they can be expensive.

To reduce the cost, you should delay the point at which the policy pays out to at least 26 and ideally 52 weeks. Statutory Sick Pay and your employer will usually cover the first 28 weeks of any illness, save an emergency fund of about 26 weeks pay to get you to the 52 week point. You are very unlikley to claim on such a policy, but if the worst happens it will be a godsend.

csgohan4 · 4 October 2018 at 7:29AM

not a question really on having income protection, I have enough cover to cover my mortgage and general outgoings.

for such a small amount, it's worth it, insurance is rubbish when you don't need to claim, but in this case that would be a good thing

dunstonh · 4 October 2018 at 8:54AM

From what i briefly know of income protection, they only pay a % of your income you get now and you pay in each month. You also state how long you can survive without needing the month, from say 1 month to say 3 months. They then pay you the money for 1 year and then that's it -

That is not correct.

You are thinking of the payment protection plans (PPI). The OP is looking at permanent health insurance (PHI). PHI is long term insurance and will payout until retirement age if set up to do so and a claimable event occurs.

Also don't forget I believe you need to be in the plan for minimum of 3 or 6 months before you can claim and you must of joined not know about any potential job loss or anything.

Also not true. You are covered from day 1 as PHI is medically undewritten at point of sale. Again, I suspect you are thinking about PPI.

This i just what i picked up a year or 2 ago when i briefly looked at it

My gut feeling is that you probably only looked at comparison sites. They prefer to retail PPI as its electronic, simple to set up (no medical underwriting at point of sale) and can earn them more. That is not proper income protection that the OP is referring to. PHI (the proper type of income protection) is mostly retailed via IFAs and whole of market protection advisers.

Whitterbod · 4 October 2018 at 9:05PM

hello
my income protection plan costs £115 a month taken out a few months ago, im early fifties this will pay if i cant do my specific job till im 65 years old it pays out £1100 a month and kicks in after my work sick allowance ends , some only pay for a year and some will only pay till you are fit to do a job,also a few exclusions for me due to glasses and hearing aids ,i went through a broker as i wanted to talk to someone about policy specific things , eg job specific and how the premiums might rise each year

kidmugsy · 4 October 2018 at 9:47PM

Here's your man.
http://monevator.com/do-you-need-income-protection-insurance/

Income Protection

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