Insurance and protection cover: things to consider
Few things in life can provide more peace of mind than having a secure financial future. Whether it’s your family, home or lifestyle, knowing that the things that are most important to you are protected if the worst should happen means you can enjoy the here and now without worrying about what the future may hold. Insurance and protection cover: things to consider.
Facts - at a glance
- 98% of protection insurance claims presented in 2019 were paid out upon claiming.1
- UK insurers pay out £14.5m every day for protection policies.2
- Statutory Sick Pay is only £95.85 per week for a period of up to 28 weeks.
- 141 million working days were lost due to sickness or injury in the UK during 2018.4
- 50% of UK citizens born after 1960 will be diagnosed with a form of cancer at some point in their lifetime according to Cancer Research UK.
Many people use multiple credit cards in their daily lives, and it’s not uncommon to take out a loan to cover home improvements, purchase a vehicle, or to consolidate debt. Mortgages are likely to be the most significant credit people will ever have. Short Term Income Protection Insurance (STIP) is a solution that can provide you with an income to cover the cost of your credit repayments and essential outgoings for up to a year.
It’s important to note that most insurance policies won’t cover you for the first three months of your redundancy, so it’s wise to have savings to cover this period. STIP can provide short-term financial relief, but you should keep in mind that if you were aware redundancy was a probability within 6 months of taking out your policy then it’s unlikely you’ll be able to make a claim.
Many people assume they’ll be adequately protected by sick pay should they suffer from an illness which is temporary in nature. However, the Statutory Sick Pay employers are legally obliged to provide is only £95.85 per week3. Income protection insurance is designed to cover situations where you are
no longer able to work due to illness or injury. Self-employed people can find income protection insurance particularly relevant, as their business may depend on them alone.
Injury and critical illness
If the need to replace your income due to critical illness or serious injury should arise, government benefits may not provide sufficient relief.Some employers provide critical illness and injury cover schemes, but it is unwise to assume that all conditions and eventualities are covered – always read the small print, and consider taking out a policy which covers any gaps in your employer’s
Life cover is a sensible option for anyone with dependents who relies on an income rather than being independently wealthy. Cover differs between policies, but most usually only pay out upon death. However, there are options if you’d like your policy to provide a payment upon a terminal diagnosis or serious disability.
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Insurance and protection cover: things to consider - if you need any help and advice please get in touch.
Source: Adapted from Quilter client fact file 2021