Millions of us take out insurance to cover our home, car, health, pets, life, holidays, wedding and teeth. And yet, if one in 10 people insure their mobile, why don’t they also insure their own income?
If you fall ill this Christmas, it’s fairly safe to say in the current climate of austerity that George Osborne won’t be popping round with a bumper hamper and a big cheque. So how would you get by if you couldn’t work?
You might have savings, family or a credit card you can fall back on, but what if your illness carries on for longer? Standard statutory sick pay is £81.60 a week and Employment and Support Allowance is under £100 a week.
That’s not enough to live on for most people, if you qualify at all. And if you need someone to care for you full-time, carer’s allowance of £55.55 a week isn’t going to go very far if they have to give up work to look after you.
Why not protect your income?
One answer to the problem is to take out income protection insurance. So what’s stopping you from taking it out? Here are the reasons I’ve picked out:
- Cost: Income protection is relatively expensive, particularly at a time when household budgets are stretched.
- Lack of awareness: Many people just aren’t aware that income protection exists.
- Lack of a ‘trigger’: If you take out a mortgage, you may want to protect the repayments from day one. Income protection is different as there’s no obvious time to take it out.
- Trust in the state or family: If you fall ill, someone will take care of you, won’t they?
- Mis-sold payment protection insurance: The spectre of PPI has undermined consumer confidence in the whole protection industry.
- Obsession with life insurance: We know we’re going to die at some point, so wanting to provide for our family when we do makes sense. However, most people are far more likely to fall seriously ill than they are to die.
- Mistrust about whether a claim will be paid: A recent petition called on the government to ‘stop fluffy definitions in protection insurance policies’. They have a point – if consumers don’t fully understand what they’re signing up to, it increases the chances that the insurer won’t pay out when a claim is made.
I’m keen to know whether any of the above reasons (or others) are stopping you from taking out income protection. And, if you found yourself unable to work, where would you turn?
Loading ...
