Ill-health keeping you from work? How do you protect your income?

During troubling times, you may find yourself unwell and unable to work. If that happens, how do you ensure that you and your family will have what you need to continue living without your regular income? The most common way is to purchase income protection insurance.

What is income protection insurance?

Income protection insurance is a long-term insurance policy that can replace part of your income should you become seriously ill or disabled. In most cases, it covers the majority of illnesses that would prevent you from working. 

While your policy lasts, you are able to claim on it as many times as necessary in cases of remission or temporary returns to work. 

It is important to note that there is often a waiting period before you begin to receive any payments from your policy. Frequently, it is arranged to begin some time after your normal sick pay runs out. The longer you can delay requiring payment, the lower the premium you are likely to receive.

Do I need it?

While it would be easy to say that everyone could use a certain level of income protection, we feel it is important to help you be informed about making that decision for yourself. 

That said, there are two categories of people that may want to consider income protection insurance more than others. Those are people who are self-employed and those who do not have access to sick pay for longer-term illnesses. 

In these cases, it can be especially important to ensure that you are in a situation to maintain an income should you become ill.

There are some circumstances in which purchasing income protection insurance may not be the right decision for you. Those circumstances are:

  • If you have long-term sick pay (12 months or more)
  • If you have enough savings to manage for 12 months or more
  • If you will be supported by a partner or family during this time
  • If you are able to maintain your lifestyle and payments on statutory sick pay or disability payments

Not only are those circumstances somewhat rare, but it can also be difficult to predict the availability of those funds in the future. For instance, if you are relying on savings, an unrelated and unexpected event may eat into this before you are able to return to work.

(See more: The importance of financial protection)

How do I get income protection insurance?

You may have heard that seeking insurance in Jersey is difficult and that there are few options available. While it is true that not all insurers will work with clients from Jersey, many cover residents here just as they do throughout the UK. 

If you seek the help of a financial adviser, they can help you look at your overall financial situation and personal circumstances to find the best deals and coverage for you. Along with understanding your needs, a financial adviser will have access to deals from insurance providers that are not available on the general market.

Interested in talking to one of our advisers about how to prepare for your future? Get in touch with us here.