Protection insurance is something that everyone should consider. Nobody plans for unfortunate circumstances to happen to them, but everyone should consider that they may happen.
We have (probably) all heard of Buildings and Contents Insurance, but what else is there?
Protection insurance is there to financially cover yourself and your family, should anything happen to you that you weren’t planning for. As we have spent 2020 in a global pandemic, questions about protection insurance might have come up for you so hopefully we can help to answer some of those.
What sort of protection should I already have?
If you are over 18, working and are paying a mortgage or rental payments on the place that you live, then you should consider Income Protection. If you were to find yourself in an emergency situation and were unable to cover your house payments and bills, income protection will be able to help you.
As a couple, if you have a mortgage already, then the bare minimum protection should be life cover. If the worst should happen to either of you during your mortgage term, the partner is not left to pay a mortgage that they may not be able to afford. You should also consider critical illness cover.
Of course, depending on your situation, perhaps it would be good to have Family Income Protection. This would then mean that there will be an income for the family you may have left behind until the children are 21 years old.
What if I don’t have protection right now?
There are a number of questions that you should ask yourself, including how worried are you and who are you responsible for?
No one plans to become seriously ill or have an accident and subsequently be unable to work. Some companies will continue to pay sick pay, but not all will; a large number will only offer statutory sick pay for as long as they are required to.
An old saying says “Its better to be safe than sorry” and so it is probably worth considering that. Do you even know how much this type of protection could cost you?
What about with COVID? Can I get Income Protection?
It’s worth noting that not all Income Protection protects you from redundancy. Some do, but a lot of them have become unavailable in the current climate.
Income protection will replace a certain proportion of your income if you are unable to work due to incapacity or illness. Some of them have small print about COVID, most do nowadays, so it is worth looking into that before signing up.
I’m furloughed, am I able to get Income Protection?
Just to re-iterate, Income Protection is not there to pay you if you lose your job; it’s for if you are unable to work through accident or illness. So yes, you can still get Income Protection while you are furloughed, but you’ll need to working at least 16 hours a week to make a claim (unless you are a stay at home parent – then you need something else anyway).
What about if I’m self-employed? Is there protection for me too?
There is lots of protection for self employed people. If you are a sole trader or a CEO of a Limited Company, there are various different options. Don’t worry, self-employed people are not left out when it comes to protection. Talking to an advisor will help you to understand what is best suited for your needs.
Is it worth cancelling my insurance if I am struggling for money?
Its always better to have something in place than nothing but its understandable if you are struggling, to look at where you can cut your outgoings.
It is easy to up and downgrade insurance payments so if you need cash, please reach out to your advisor or your provider to discuss your current situation through. You might find that there is a less radical solution for you to take and that might mean you have less regrets in the future. Of course the final decision is always yours, but once you know all of your options, you will be able to make the most informed decision.
If you’re still not sure what is going on when it comes to protection insurance and want more advice, we at Mortgage Fit are always happy to assist our clients with the protection planning journey.
