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If You Were Unable to Work Due to Illness or Injury, How Could You Afford to Pay Your Rent? If the Answer Is You Couldn't, Income Protection Insurance May Just Be the Answer

Even when we are fit, healthy and able to attend work every day, we all still have money worries; whether we're able to afford that night out at the end of the month, whether we should pay the holiday off in full or set up regular payments, whether we went a little too gung-ho last month. We may have to scrimp and save but if we were completely honest with ourselves, most of us tend to have our standard monthly outgoings covered. 

However, what would happen if you were unable to work due to illness or injury? Where would your money come from to cover your regular outgoings? Are you covered through your company sick pay? Do you even get sick pay? If not, could you survive off the government's Statutory Sick Pay of £94.25 a week for a maximum of 28 weeks?

Let's be honest, for the majority of us, that wouldn't even cover our weekly shop. 

Most of us don't want to spend our money out to cover for the "what ifs" that may never happen but in the event that you needed that protection, it would be the best money you've ever spent. Think of the likes of your essential outgoings: rent, gas, electricity, food. Which one would be first to go if you couldn't afford them all?

Taking out an Income Protection Insurance policy would ensure that the financial burden is lifted exactly when you need it most. 

Could You Survive off Statutory Sick Pay at £94.25 a Week? The Average Monthly Rental Payment in the North West is £739 Per Month

What is Income Protection Insurance?

Income Protection Insurance pays a tax-free percentage of your gross salary to you on a monthly basis when you are unable to work due to illness or injury. It is designed to replace lost income if you are off work and not getting paid. 

When opting for an Income Protection Insurance policy, you are able to choose at what point the payments begin after you are unable to work, called a Deferral Period, payments can start anywhere from seven days to two years after. The quicker you wish for the payment to start, the higher the premiums will be, however, it is important to consider how long you will be able to survive without your income before choosing a timeframe. 

Who Benefits from Income Protection Insurance?

Anybody who relies on their income to provide financial support to their household should consider Income Protection Insurance. The obvious candidates are those who are self-employed and those who are employed but are not provided with sick pay cover. If this is your situation, then you are at risk of having no money coming into your household but are still responsible for paying monthly outgoings. 

However, even those employees who do get paid when sick should check if there are any limitations to the cover such as the amount of time it is paid for. Homemakers are also eligible for Income Protection Insurance. 

How Much Does Income Protection Insurance Pay Out?

On average, Income Protection Insurance pays out about 60% of your salary before tax but this is completely dependent on the Lender and agreed policy. No insurance policy will pay 100% of your income, as this is seen as a deterrent to return to work. 

You can choose how long your insurance pays out for, it could be for a specific time period, until you are fit to return to work or until retirement age. The longer the claim pays out for, the higher the premiums will be.
TVG Property Management t/a TVG Lettings introduces to Home Legal Services Liverpool LLP t/a Right Click Finance for the provision of mortgage and non-investment insurance advice. Home Legal Services Liverpool LLP t/a  Right Click Finance is an appointed representative of Primis Mortgage Network.  Primis Mortgage Network is a trading name of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some forms of Buy to Let Mortgage.   

The guidance and/or advice contained within this web page is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.