Without income protection cover you’re courting disaster

So you think it will never happen to you? Think again because accident, sickness or redundancy is just around the corner from us and many families are ill prepared for the financial fall out because more than 40% of all families have not purchased income protection cover to protect against these all too common traumas.

Insurer Direct Line presents some stark facts: one in three of us will get cancer at some point in our lives and every day 650 people lose their jobs. Yet families have neither adequate income protection cover nor enough savings to keep them afloat if disaster strikes.

A survey by NOP for Direct Line suggests that while 60% of families have some savings, the rest have less than £5000 – barely enough to keep the average household afloat for three months according to government figures. A third of people have no insurance to pay off the mortgage if they die and only a quarter have income protection cover.

The poor take-up of income protection cover is blamed on ignorance about the level of state help available to people who suffer illness or become unemployed. In reality there is nothing for nine months.

When people were asked to list their insurance priorities, 16% rated mortgage payment protection top, with 8% for income protection cover and only 7% for critical illness insurance.

Insurance Brokers Council Director General, Steve Pritchard says, “In an ideal world everyone would buy income protection cover, but they don’t realise that they need it until it is too late, at which time income protection cover is not an option.”

Kevin Carr of online broker Lifesearch says, “What I like about income protection cover is that once it is in force it cannot be taken away even if one’s health deteriorates. In addition income protection cover covers stress and back problems, which are unlikely to be covered by critical illness insurance.

The maximum benefit on income protection cover policies is 50% of gross pay because they are free of both tax and national insurance.

Which type of insurance is best depends on the circumstances of each family says, Insurance Brokers Council’s Pritchard, “Critical Illness Insurance is useful if you have a mortgage but it is no substitute for decent income protection cover, which will continue to pay an income.”

Insurance Broker Angus McLeod decided that income protection cover was a priority when he bought a house with his new wife Tina. Angus says, “Buying the house made me get my income protection cover sorted. I’m a great believer in covering all circumstances.”

He found an income protection cover through The Insurance Brokers Council and has covered £1000 per month against the risks of accident, sickness and redundancy for only £55 per month. “This isn’t much for what it gives.” He says.