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Income Protection

Whilst you may have life cover in place, how would you or the family cope if a wage earner was off work for a long period of time?

Have you though about how you or your family would cope if you were off work for a long period of time?

There are currently 1.66 million people in the UK who are unemployed. Source: Trading Economics   top reasons are, Cancer 21% and Mental Health 18% Source: LV November 2016.

The average age of an income protection claim for a female is 44 years and 48 years for a male.

Income Protection Cover

One route is to take out an Income Protection policy.  This product is designed to pay out a tax-free monthly sum in the event that you are unable to work due to illness or injury.  It pays out until you can start working again, or, in some cases, until you retire.

Each policy will have different conditions, such as cover choices against not being able to work in your own occupation, or any occupation, and you would obviously need to disclose any pre-existing medical issues.

First though, you' have to do the maths and establish if you would just receive the Statutory Sick Pay of £88.45 a week (paid for up to 28 weeks, if you qualify), or if there are additional benefits from your employer or the state.

Once you'e got an idea of this income stream, you can then decide when you' like your income protection cover to kick-in (called the deferred period).  The longer you wait the cheaper the premium will be.

Do be sensible about how much you require until you're able to return to work (or have retired).  In the same way you wouldn't need a payout commensurate with buying a new house if the kitchen floods, your potential payout via an income protection policy should be calculated in a similar way (up to a maximum amount).  And again, the less you need, the lower the premium.

But do consider as part of that process that the same LV= research showed that almost a quarter of respondents said that their savings would actually run dry after just two months of trying to bridge any income gap.

Income Protection is a complex product, with a vast array of options, so it's essential that you take advice. Do get in touch if you'd like to find out more.

If you take out an income protection policy and stop paying premiums you won't get any money back and you'll no longer be covered.

As with all insurance policies, terms, conditions and exclusions will apply.

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