Income
Protection Insurance is a long-term protection insurance that is meant to
provide a policyholder with a guaranteed monthly income if they are unable to
work due to illness or an accident. However, there are numerous prevalent
fallacies about what a policy would protect and what will not be covered, as
there are with many protection products such as Life Insurance and Income
Protection.
In today's
tutorial, we'll look at ten of the most common misunderstandings customers have
expressed.
Purchasing
an Income Protection policy is a prudent measure that many families may take to
protect loved ones who are financially dependent on them. Many business listings
why not ask yourself the following questions before deciding whether to obtain
or investigate a policy in the future:
If you were
to lose a considerable amount of money for three months or more due to illness
or accident:
1 - Could
you afford to pay your mortgage or rent?
2 - Do you
have bills to pay, credit cards to use, or loans to take out?
3 -
Unpredicted financial increase in spending
Statistics
on the Workplace
Because the
worldwide pandemic will have an influence on the years 2020-2022, we looked
back at earlier years to find pertinent data. According to data collected from
the Health and Safety Executive's website, 38.8 million work days were missed
owing to sickness and workplace injuries in 2019/20. In 2019/20, the following
were the leading causes of days missed due to work-related illness business listings:
1 - 17.9
million people suffer from stress, despair, or anxiety.
2 - 8.9 million people suffer from musculoskeletal problems.
Household
Statistics on Insurance Types
The ABI
(Association of British Insurers), like the Health and Safety Executive, does
not have consistent statistics for 2020-2022. As a result, their most current
household statistics data is from 2018-2019. Compulsory automobile insurance is
the most common type of policy purchased by the UK's 26.5 million households.
Other
short-term insurance options include:
Motor
Insurance - 20 million
Contents
Insurance - 19.3 million
Buildings
Insurance - 16.5 million
Mortgage
Protection - 2.8 million
Private
Medical Insurance - 1.6 million
However,
data show that families with longer-term protection insurance are less likely
to purchase policies that they may need in the future. Many households may be
hesitant to get longer-term insurance owing to prevalent myths and policy
misunderstandings. As seen here, just about 2% of UK households have Income
Protection, leaving the remaining 98 percent vulnerable to financial hardship
in the event of a workplace accident or long-term illness.
Household
long-term protection products:
Whole of
Life Insurance - 4.8 million
Term Life
Insurance - 0.6 million
Income
Protection - 0.2 million
After reviewing
data from the Health and Safety Executive and the ABI. Our handy guide to 10
Common Income Protection Insurance Myths will help you debunk some of the most
common myths regarding long-term insurance policies free listing:
1 - It Isn't
Necessary to Have Income Protection Insurance
Some
individuals may believe that Income Protection is a waste of money and that it
is unnecessary to acquire. Although many would agree that all people take their
health for granted and sometimes overlook ailments or believe that they will
not be affected, however, when you consider that 32.8 million working days
would be lost in 2019/20, Income Protection may be more significant than you realize.
Income
Protection insurance can cost considerably less per month than you think, and
with the correct amount of coverage, you can expect to receive between 50% and
70% of your typical income. If you use an FCA-regulated broker, such as Protect
Income Insurance, to compare policies from all UK insurers to get the best
policy for you, you may help protect yourself if you are unable to work for an
extended period of time due to sickness or accident.
2 -
Redundancy is covered by an income protection policy
Many
policyholders may be upset if they are laid off and their claim is denied due
to this frequent misperception. To be clear, a redundancy is not covered by Income
Protection insurance. The main goal of Income Protection is to ensure that the
policyholder has a steady income if they are unable to work due to illness or
an accident. This sort of policy is sometimes confused with payment protection
insurance (PPI) or mortgage payment protection insurance (MPPI). Payment
protection insurance and mortgage protection insurance both cover particular
payback obligations such as credit cards, mortgages, vehicle loans, and other
purchases. Claim payments for PPI and MPPI normally come to an end after a
certain amount of time, usually between 12 and 24 months.
An Income
Protection policy isn't limited to covering the costs of specific items, and
you can use it however you want. The right degree of protection will allow you
to pay a considerable amount of your regular income in monthly installments.
This means you can get between 50 and 70% of your typical working salary and be
paid until you are able to return to work, or until you retire if your sickness
or injury prevents you from working.
3 - Benefits
from the state will be sufficient to get me through
Although the
UK has one of the greatest benefits systems in the world, it is also rather
limited in terms of the quantity of assistance it can provide. For a maximum of
28 weeks, a person receiving Statutory Sick Pay (SSP) might get £96.35 per week
before tax and national insurance deductions. Although incredibly advantageous
in terms of assisting with basic living expenses, the decline in monthly income
may be a very stressful period. Your company may also be able to provide you
with some sick pay, although this is normally only provided for a short amount
of time.
By
purchasing Income Protection Insurance to secure your household income, you may
rest certain that you will be able to cover a considerable percentage of your
typical monthly income. Instead of relying on Statutory Sick Pay (SSP) and
being unable to maintain a normal quality of living due to a reduction in
income. Income Protection insurance will pay you tax-free benefits equal to up
to 70% of your monthly income until you are ready to return to work or retire,
whichever comes first?
4 - The Cost
of Income Protection Is Extortionate
Many families,
as encouraged by parents and experts such as Martin Lewis, evaluate their
monthly finances on a regular basis. It's critical to assess your finances on a
regular basis and to save and invest wherever feasible. The assumption that
your monthly financial income will remain constant is an often forgotten
component of the budgeting process, thus it makes sense to look at several ways
to secure the most significant part of your monthly budget.
You'll
quickly learn that Income Protection coverage isn't as pricey as you would
think if you do some research. Many policies let you to adjust your monthly
rates to fit inside your household budget. Deferring the waiting time before
getting your monthly claim payouts is the most typical strategy to lower your monthly
premium.
Using an
FCA-regulated broker, such as Protect Income Insurance, can assist you in
finding a monthly premium that is both inexpensive and protects you. Comparing
Income Protection Insurance Quotes from all UK providers in one quick search can
help you save time and money when it comes to finding the right coverage for
you and your family.
5 - I Don't
Need Insurance Since It Won't Happen To Me
It's human
nature for many people to think that if we're in good health now, we'll stay
that way for the foreseeable future. However, according to data from the Health
and Safety Executive, this might be a pretty complacent attitude.
According to
the findings, the fact is that more people are missing work days owing to
long-term illnesses and accidents. Spending a few minutes to look into income
protection for the future is one approach to ensure that you have enough
monthly income to get by through any lengthy time of unemployment.
6 - My
Insurance Policy Isn't Covering Me
Following
the ABI's annual report for 2019/2020, which details the various types of
longer-term protection plans for which claims have been made? It is a common misperception
that an Income Protection policy will not pay out:
Critical
Illness - 91.3%
Life
Insurance - 97.0%
Total
Permanent Disability - 66.4%
Whole of
Life Insurance - 99.99%
Income
Protection - 86.5%
The
Association of British Insurers revealed that the main cause for unresolved
Income Protection Insurance claims was problems with insurance purchase. Your
claim should be successful if you have paid your monthly payments and given
accurate personal information when you took out the policy.
It is
critical to notify your Income Protection Insurer if your income or
circumstances have changed, since you may be under or over covered. If your
income or circumstances change, the amount of benefit under a policy must be
modified to ensure you are not paying a larger premium than necessary. By
assessing your Income Protection Insurance with an FCA authorized broker such
as Protect Income Insurance, you can verify that your policy is still cheap and
accurately represents your financial condition.
7 -
Everything Will Be Covered By My PPI Policy
Although
these forms of protective cover may appear to be comparable, the fact is that
they protect you in quite different ways. A PPI policy is typically taken out
to safeguard against the possibility of not being able to keep up with loan or
credit card installments. As a result, a PPI policy is quite limited and will
only assist with debt payback.
Obtaining an
Income Protection policy, on the other hand, does not have the same limits and
allows you to cover household expenses such as food, gasoline, utilities,
clothing, and any other home expenditure. If your income is severely reduced as
a result of illness or an accident, Income Protection insurance will pay you a
tax-free monthly benefit ranging from 50 to 70% of your monthly income to help
you maintain your lifestyle during any lengthy time of absence from work.
8 - I Am
Self-Employed, I Am Unable To Obtain Income Protection Insurance
There are
several providers that can offer protective plans, in addition to our thorough
discussion on the necessity of Income Protection for the self-employed. Because
self-employed people do not have the advantage of employer-provided absence
coverage, having this form of coverage is more vital than having it as an
employee. As a self-employed person, you may only have access to state benefits
if you are forced to take time off due to illness or an accident.
By comparing
prices and searching all of the UK insurers for self-employed Income Protection
through an FCA authorized broker, such as Protect Income Insurance. Will assist
you in locating the most cost-effective insurance coverage that will cover
between 50% and 70% of your
Earnings
before taxes. A vital aspect to keep in mind is that you should cover a
percentage of your earnings rather than your company's sales to prevent
over-insuring.
You can
secure financial stability for the future by conducting considerable research
or choosing a regulated broker such as Protect Income Protection.
9 - There Is
an Excessive Amount of Paperwork
Income
Protection Insurers, like other UK insurance providers, understand that claim
forms and application forms must be simple to fill out without a lot of fine
language. Using Protect Income Insurance's experienced adviser service can make
the application process as simple as possible while ensuring that you obtain
the insurance you need while staying within your monthly budget.
If you have
any queries or want to double-check something particular about your situation
or which coverage could be best for you, the specialist consultants at Protect
Income Insurance can assist you. Applying for an Income Protection policy has
been simplified and made faster, with no long waits.
10 - I
Already Have Income Insurance
You have
taken a significant decision by deciding to purchase Income Protection
insurance. You've given yourself peace of mind by ensuring that you'll get paid
even if you're out of work for a lengthy period of time.
A vital
aspect to keep in mind is to keep track of the amount of coverage your premiums
provide you with on a regular basis. If your personal circumstances change,
such as a job change or a large raise in wages. It's worth doing the math to
determine if you’re current Income Protection insurance provides the optimum
protection.
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