Everything you need to know about income protection and critical illness cover

Category: News&Protection

One of the lessons that the pandemic has taught us is that the unexpected can happen at any time, which is why it’s important to plan ahead.

If you became unable to work due to illness or accident, it could have a serious impact on your finances, particularly if you’re the main or only earner in your household. That’s why you may want to consider some sort of protection.

If you want to safeguard yourself and your loved ones against the unexpected, read on to find out everything you need to know about income protection and critical illness cover.

Income protection pays you a portion of your salary if you’re unable to work

If you have to take time off work due to illness or injury, income protection can be invaluable. Losing your income can have a serious impact on your finances, particularly if you have regular commitments such as mortgage payments or school fees for your children.

This form of protection pays you a monthly sum until you can return to work or until the end of your protection period. The amount you will receive typically depends on your salary.

Income protection typically pays out after an “excess” period, which is the time that you have to be off work for it to kick in. Usually, the longer this excess period is, the cheaper the cost of your cover.

Many people choose an excess period that ties in with the sick pay that they would receive from their workplace. For example, if you received full pay from your employer for eight weeks, you may want your income protection to kick in after this.

The cost of income protection is determined by factors such as:

  • Your age
  • How risky your work is
  • Your medical record
  • How much income you want to cover.

It’s important to bear in mind, however, that most income protection plans don’t cover every illness and you may not be covered for pre-existing conditions. It’s important to check the terms of your policy to see what you’re protected against.

Income protection can be invaluable for helping you to ride out periods in which you’re unable to work, without having to dip into your savings to make ends meet. It can also be particularly useful if you’re self-employed and wouldn’t be able to earn during your period of recovery.

Critical illness cover will pay you a lump sum if you’re diagnosed with a serious illness

Being diagnosed with a serious illness can be devastating. Not only can it impact you physically and emotionally but, if it leaves you unable to work, it can also seriously affect your finances.

When recovering from a serious illness, worries over money are the last thing you need. That’s where critical illness cover can help you, as it provides financial support so that you can focus on getting better.

Critical illness cover will pay you a cash lump sum if you’re diagnosed with, or need treatment for, one of a list of serious illnesses. This lump sum can then be used to repay your mortgage or other debts, modify your home if you have a disability, or maintain your standard of living if you need to take extended leave from work.

As with income protection, the illnesses covered varies from insurer to insurer, so it’s important to check the terms of your cover to know what you’re protected against.

Serious illnesses can affect anyone at any age, which is why critical illness cover may be more useful than you think. According to Cancer Research UK, more than 367,000 people are diagnosed with cancer each year in the UK – that’s a new diagnosis every two minutes.

Critical illness cover can be invaluable for giving you peace of mind to know that even if the unexpected were to happen, your finances wouldn’t be impacted.

The two forms of protection can be mutually beneficial since they address different issues

Some people believe that they should only get one form of protection or the other, but this isn’t true.

Since they address different issues in different ways, you may find that you can gain the most peace of mind by having both – with income protection to shield you from short-term disruptions and critical illness cover to protect you from more serious ones.

Ultimately, if you want peace of mind it’s important to protect yourself so that your long-term goals aren’t affected by illness or accident.

Get in touch

If you want to protect yourself from unexpected illness or accidents, we can help. Email us at office@verve-financial.com or call 0330 320 5048.

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We’d love to have a chat with you over a coffee. To book a meeting or find out more, fill in the form and we’ll get back to you.