When You Don’t Need Income Protection Insurance

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In the UK, income protection insurance has been continuously increasing in popularity due to the benefits it could offer to anyone who basically has a stable job. Income protection insurance addresses the fear of suddenly losing your income due to unemployment, illness, or disability, aiming to replace a portion of your monthly salary so you’€™ll have something to live on when bad luck strikes. However, like many other types of insurance, it is not designed for everyone. If you belong to the following criteria, you might not need IPI anymore.

You could live on your sick pay

Although one of the misconceptions that lead people to decide against income protection insurance is having sick pay at work, there’€™s actually a good reason to consider this one. Although you must not neglect IPI solely for this reason, you should check what kind of sick pay you have at work. If your benefits package allows you up to six months or more of coverage, you might be able to get by and settle the bills during those months, as long as you won’€™t be gone for more than that. Besides, you might not be able to claim your full amount of IPI benefits while still receiving your sick pay.

You have enough savings

Having savings doesn’€™t automatically mean that you don’€™t need additional protection anymore. In fact, you might want to keep your savings intact. However, if you have huge enough savings that could help you last through long periods of unemployment or disability, you might actually be able to eliminate your need for IPI. Besides, it might be more worthwhile to further add to a pot of money that grows rather than to an insurance plan wherein there’€™s no guarantee when or if you’€™ll be able to use it, not to mention the reduced amount of money you’€™ll be receiving.

You have debts and no savings

Sure having IPI can give you that financial protection, but when it comes to priorities, there’€™s nothing more important than paying off your debts and saving money. It doesn’€™t make sense at all to get an insurance policy while struggling to pay off your creditors and having nothing to access in your savings account during emergencies. In this case, it would be better to put your extra cash towards debt repayment and building up your emergency fund.

You are nearing retirement

If you’€™re nearing retirement, it might not actually be wise to purchase income protection insurance. First and foremost, any benefits you will be receiving from your IPI will cease once you start receiving your retirement benefits. Second, if you are old enough to retire early, you can start taking your pension if you are unable to work.

You have a family to support you

Perhaps your children are all grown- up, or your spouse is soon to retire and you’€™ll both be receiving your pensions and any state benefits. This means less financial obligations for you and more source of income that you and your partner could count on, even without the income protection insurance.

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