Ever thought about how an illness or injury could affect you financially, especially if it lasts for a long time and stops you from being able to work? From bad backs to broken bones, critical illnesses to poor mental health, there are countless things that could leave us unfit for work. Yet most of us don’t have much of safety net in place in case it happens to us.
How much you’d be affected financially if you couldn’t work for health reasons depends on your own circumstances. Most of us have financial commitments of some kind (mortgage, rent, food, bills, etc.), but lots of us are also parents, which means we have other people relying on us having an income – our children.
If you’re a parent and need to protect yourself against this kind of thing happening, it’s worth looking into income protection – the kind of insurance that does just that.
What is income protection? How does it work?
Income protection is an insurance policy that pays out a monthly amount if you can’t work for medical reasons. It ultimately covers you for anything and everything health-related, so long as a medical professional signs you off work. If you need to claim on your policy, it’ll pay out monthly for a set amount of time (e.g. 2 years, if you buy short-term cover) or for as long as you need it to (if you buy long-term cover). Which kind you go for depends how comprehensively you want to be covered and how much you want to spend each month to be insured.
One important thing to know about income protection policies is that they always come with a ‘waiting period’ (or ‘deferred period’). This is the amount of time you wait before it starts paying out. The longer you can wait, the cheaper your policy will be. A good rule of thumb is to time it so it would kick in after your sick pay stops, so you know you’ll always have money coming in.
How income protection helps if you’ve got children
Being a parent means having financial dependents – a.k.a. other people who rely on your income. That’s why it’s one of the main reasons people get cover like income protection – because you not having an income could affect your children too. This is particularly the case if:
● You’re a single parent
Being a single parent usually means being a single-income household. Not having the financial cushion of another income coming in could make it even more difficult to keep up with the bills if you couldn’t work.
● You’re self-employed
This is another key reason to get cover – especially if you’ve got children too – because being self-employed usually means you don’t have the back-up of sick pay to tide you over. This means the financial implications of not being able to work could affect you even more quickly.
Think you need income protection?
This guide to the UK’s best income protection companies is a good place to start. It’s also a good idea to have a think about what might need covering in case you lost your income – i.e. what are your essential bills and outgoings? How much money is needed each month to make sure you and your children are financially stable? This will help you work out how much cover you might need to give you peace of mind in case of illness or injury.