For the first time since 2007, the number of individual income protection policies has increased year on year, ABI data has revealed.
Income protection insurance works to replace part of your income if you can’t work due to sickness or injury, which helps you to keep on top of your monthly outgoings and helps you to avoid debt.
Many more people are being made aware of the benefits income protection can provide, and in 2015 there were 1.15m individual income protection policies in force, which is a 2% increase compared to 1.13m in 2014.
Data also shows the growth in the group income protection market with the number of people covered by their employer increasing by 3% on the previous year.
In 2013 the group income protection market covered over two million workers in the UK and it continues to grow. [1]
So why would you need income protection? Here are some possible reasons:
- If absence from work meant that you would struggle to keep on top of your essential monthly household bills.
- If you’re self-employed or employed and you don’t have sick pay to fall back on.
- To protect your finances in uncertain times when you are off work.
The benefits of income protection are clear, but when Which? asked the public whether they have income protection, just 9% said that they did , compared with 41% who have life insurance. [2]
Research conducted by the Centre for Economic and Social Inclusion shows that 10.8 million working households would see their income fall by more than one third if the main earner had to stop work due to ill health – that is 60% of UK working households.
Two thirds of this group would see their income fall by more than half, taking into account the benefits households receive from the State. These statistics highlight the dramatic fall in income households would face without income protection insurance. [3]
There are different types of income protection on offer such as accident, sickness and unemployment protection which is more suitable for short-term instances. It’s often referred to as short term income protection insurance because you can only claim for a maximum period of between 12 and 24 months.
However, income protection insurance gives you longer-term cover if you’re unable to work for health reasons. The major difference is that income protection policies are intended to be long term – they’ll pay you until you can return to your job, find another job or even until you retire.
No matter what line of work you’re in, employed or self-employed, it is vital to consider how you and your family would cope if an absence from work through sickness or injury meant you had no regular income coming in to your household.
Find out more about our Income Protection Insurance today so that you are prepared for the future. You can also find out about our new enhanced benefits programme by visiting Our Partnership with Nuffield Health.
[1] https://www.theguardian.com/money/2013/aug/31/income-protection-off-work-sick
[2] http://www.which.co.uk/money/insurance/reviews-ns/income-protection/what-is-income-protection/
[3]https://www.abi.org.uk/Insurance-and-savings/Topics-and-issues/Welfare-reform
