Did you know most people have some form of phone, car, pet or contents insurance, but nothing to replace their salary if they were off sick long term?
This month, we’re looking at the importance of having personal insurances to protect your income, specifically critical illness cover, and income protection – an accident, disability and sickness cover.
Whether you own your home, rent, or live with family while you’re saving up a deposit, having an insurance policy to cover your salary is a must.
Just as contents insurance replaces items that get damaged or stolen and car insurance replaces your car, critical illness & income protection insurance replaces your income if you get ill.
Even if you’re lucky enough to have good health now, 1 in 2 people will develop cancer during their lifetime¹, and 83% of people with cancer in the UK are financially impacted due to this².
And, 75% of long-term work absence is caused by non-critical illnesses, with the average time off sick being just over 2 years³.
Many of us have minimal sick pay entitlement through work – or none if you’re self employed – but the good news is your local Beewise advisor can recommend the right cover for you!
Beewise FS Ltd work with lots of insurance companies, from well-known names to more specialist firms. To find out how we can help you right now, click here to arrange a call, or ring 01934 204841.
Or, scroll down for more information on why these underrated policies should be a must in your monthly direct debit line up!
What is income protection insurance?
Income protection is an insurance policy that pays out monthly if you couldn’t work due to illness or injury, replacing the salary you’d usually receive – essentially long-term sick pay.
The amount it pays out each month is decided by you, but the maximum benefit is usually around 60-70% of your salary, depending on the insurer.
It won’t match your full salary amount because you’ll also be entitled to a small amount of state benefits if you’re unable to work, and the monthly income you get from the policy is tax free.
You’ll also choose when your income protection insurance starts paying out, depending on your current sick pay entitlement.
Some people need their policy to pay out straight away if they couldn’t work, but some might not need it to start for 3 months, 6 months, or even a year.
Your local Beewise advisor can help you decide which options are right for you, and which age your policy ends at – this could be state pension age, or your chosen retirement age if older.
This is because you can claim on your income protection policy as often as you need throughout your working lifetime, and for long as you need it to pay out.
The average claim time for long-term work absence due to illness or injury is just over 2 years³, but even if you weren’t able to work again, your income protection policy could pay out until retirement age.
By putting this essential insurance in place, you’re covering your back – quite literally! – if you weren’t getting that monthly salary you need to pay your bills.
Is income protection insurance worth the money?
Without a doubt! If you were lucky enough to reach retirement age without ever being off sick and claiming, at least you’d have had financial peace of mind for you and your family.
While most people like to think it’ll never happen to them, the reality is you can’t control your health, or the world you live in.
Most claims on income protection are for things like back pain, mental health, neurological conditions like MS, and non-critical cancers and heart conditions⁴.
So, your time off work could be as a result of ill health, or due to an accident – something as small as slipping over and damaging your back, or something more serious like a car crash or being knocked off a bike.
If you’re thinking you’d be able to manage through with savings, your partner’s salary, or help from family, it’s worth really thinking about reality of that.
Almost a quarter of us have no savings and 50% of us have £1,000 or less in savings⁵. How long would your money last if you couldn’t work for a year, two years or longer?
And, wouldn’t you rather use those savings on a holiday? Or, if you’re living at home and saving for a deposit, to buy that house you’ve worked so hard to save up for?
While friends and family will always do what they can to help and support you, with their own bills and outgoings to cover, how long could they contribute towards yours too?
Income protection makes sure you’re taken care of with as little financial impact as possible to you and your loved ones. We’d say that’s worth every penny!
What exactly does income protection cover?
Depending on the insurer, your income protection policy will cover a whole range of illnesses and conditions.
As previously mentioned, that could be a back injury, so damage to your spine, a disc, or a ligament, or a mental health condition like stress or depression.
Or it could be something affecting your joints, bones and muscles, like rheumatoid arthritis or fibromyalgia. And, stomach conditions such as Crohn's disease and colitis are another common claim.
With illnesses like these, you could be off work for long periods of time, return to work, then have another flare up causing more time off work. Luckily, your income protection policy could cover you under all circumstances.
There are instances where certain pre-existing conditions won’t be covered as an insurer considers them to have a high risk of reoccurring.
But, whenever a condition is excluded from a policy, it’ll always be made clear before you put the insurance in place, so you’re fully aware of what it does and doesn’t cover.
Another good reason to get your policy in place while you’re fit and well, or have minimal health issues!
Essentially, if you need to take time off work due to sickness or injury, your income protection policy will pay out. And, if you did return to work on reduced hours for a period of time, it could top up any shortfall too.
The benefits of your cover don’t stop there either! You’ll also get additional support to keep you healthy, or to help out after an illness or injury.
Some insurers offer 24/7 GP access, counselling, physiotherapy, therapies to support recovery, and even fracture cover – a one-off payout if you break or fracture a bone.
To find out more, get in touch with your local Beewise advisor on 01934 204 841 or click here to arrange a call.
How do I know which income protection policy to choose?
With so many different options, it can feel overwhelming once you start looking into it.
But, as protection experts, we’re here to help you! Beewise will take time to chat through your situation and advise on the best options.
We also know cost can be a factor in deciding what level of cover to have, so we find the right policy to fit your monthly spending now, as well as covering your future outgoings.
And, we work with lots of insurance companies, from well-known names to more specialist firms, so can pick the right provider according to cost and benefits.
Your local advisor does all this at no charge, saving you time, money and stress! So, click here to arrange a call, or ring 01934 204 841.
Do I need critical illness cover and income protection?
Yes! Some might see one as a priority, especially if someone close has been affected by a critical illness, or been unable to work long-term due to illness or injury.
But, critical illness cover and income protection have two different aims, so are equally important.
While income protection pays out monthly in the event of an accident or long-term sickness, critical illness cover pays a one-off lump sum of money when you need it the most.
None of us want to think about being diagnosed with something serious, but when it does happen it has a huge impact on you and your family, both emotionally and on a day-to-day basis.
These are awful statistics, but every two minutes someone in the UK gets diagnosed with cancer⁶. And every five minutes, someone is admitted to hospital with a heart attack⁷.
In most cases you’re unable to work, but there are other costs to consider too – travel and parking going to and from hospital, extra childcare, a partner having to take unpaid leave.
At such a stressful time you don’t want to add money to the list of your worries. So, having a payout equivalent to a year or two years’ salary, or even enough to clear your mortgage, means you don’t have to think about work and bills.
And, the money you get when a critical illness policy pays out doesn’t have to just cover salary.
Some conditions – such a stroke, blindness or multiple sclerosis – can mean you’ll need to make changes around the home, or even move somewhere that better suits your needs.
Or your family could have to pay for additional care in the case of illnesses like Parkinson’s, Alzheimer’s or dementia.
Because income protection is designed to replace your monthly salary to cover living costs like your mortgage, rent and bills, it wouldn’t give you the full financial support you need in cases like these.
The sensible option is to have both critical illness cover and income protection in place. That way you’ve got financial peace of mind for any scenario.
What exactly does critical illness insurance cover?
This depends on which insurer you go with, and what level of cover you opt for. Your local Beewise advisor will always recommend an enhanced policy, as this covers a wider range of critical illnesses.
There is a Minimum Standards Guide for critical illness cover, meaning all policies will cover cancer, a heart attack or stroke, “providing they’re of a certain severity”.
But this could mean a lower budget policy doesn’t cover you for a less severe type of cancer, or a diagnosis of heart failure.
We believe your policy should pay out when you need it most, and in addition to the critical illnesses mentioned above, we’ll make sure you’re covered for early forms of cancer, admission to intensive care, heart valve replacement and more.
As with income protection, if you have a pre-existing condition, or previously had a serious illness, this may be excluded as an insurer considers there to be higher risk of it happening again.
But, any exclusions will always be made clear before you put the insurance in place, and your Beewise advisor may be able to find an insurer that’s happy to cover a condition others aren’t.
For instance, if you’ve previously had a heart condition, some insurers wouldn’t be willing to insure you at all. But, others might be happy to offer it at a higher rate, covering them in the event it did happen again.
That’s why using a Beewise advisor is invaluable, as we’ll put you with the right insurer for your needs and do all the legwork to get you the most suitable price!
And, depending on the insurer, you could also get 24/7 GP access, a second medical opinion for any doubts on your diagnosis, support from a personal nurse, and even overseas treatment with flights, accommodation and medical costs covered.
You can also opt to have kids added onto your policy too. Again, it’s something no one wants to ever think about, but it means if they were diagnosed with a serious illness, you could take time off work without worrying about finances.
To find out more about critical illness cover, or to get a policy in place, give us a call on 01934 204 841, or click here.
When does critical illness cover pay out?
Unlike income protection insurance which pays out monthly, critical illness cover pays out a lump sum on diagnosis.
And, the process is simple, too. Once you’ve had a diagnosis from a doctor or medical professional, you can contact the insurer straight away, with no waiting period.
You’ll also be covered from day one, so once your Beewise advisor puts that policy in place for you, you’ll have instant peace of mind.
Occasionally we hear the comment that “insurance companies don’t pay out”, with a few people convinced they use small print to not honour a claim.
But, there are only two reasons it wouldn’t pay out: if your policy didn’t cover that illness, and if incorrect or incomplete information has been given.
As long as you’re completely honest on the initial health questionnaire, and don’t have any major changes they’re not aware of after – such as taking up smoking – there shouldn’t be any issues.
Plus, if you opt for comprehensive cover, you can be confident that most serious illnesses will be covered under the policy.
So, get in touch today for expert advice on getting the right cover for your needs, along with a free comparison service across the UK’s leading insurance providers.
And if you already have cover in place, contact us for a free review of your existing policies to see if you could save money.
Call on 01934 204 841 or click here to email. With evening and weekend appointments available, we’re here to make mortgages and protection stress-free and easy.
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² Macmillan/Truth Survey, February 2020
⁴ Royal London 2022 Claims Report, December 2023
⁵ Finder.com, Savings statistics: Average savings in the UK, June 2023