Do you have income protection? Do I need income protection?

[Myturnnow4]

35 yrs old, no dependants. Fit and healthy but employer doesn't offer great terms for sickness or redundancy.

Three weeks ago: Joint mortgage with partner. Had joint policy that would payout on death or critical illness covering the mortgage and a partner who could cover living expenses for us both if needs be.

Now: Partner left me, just me on the mortgage. So, no need for cover in event of death, but income protection becomes more important.

However, the policies are looking at at least £20 a month. I can afford this, but it's not a negligible amount for me. I'm wondering if income protection is a luxury few people can afford.

what do you do?
how long would you likely be out of work if you lost your job?

If made redundant I am very confident that I'd have enough time to find an ok job that would more than pay the bills.

It's illness that is the concern. I have three months' living expenses put aside in savings and plenty of equity in the house that could be released, even if I couldn't remortgage due to illness. I have no family that could bail me out though.

Do you have any dependants?

Nope.

Find out exactly how much your employer will pay you and for how long. Then look for an income protection policy that will start to pay you when your employer stops. You can generally cover up to about 50% of your gross salary and payments are made tax free. You can then use your emergency funds to make up for the loss in income.

If budget is an issue you can choose a short term income protection policy that will pay you an income for 2 years.

If you do not have an income protection policy you would be reliant on state benefits when your employer stops paying you if you were unable to work because of ill health. An income protection policy will not help you if you are made redundant.

I would pay it. Peace of mind. What would happen if you had an accident and couldn't work for months on end. I have a policy as I'm on my own with 2 teenagers.

I've pretty much done that wedlock the broker is recommending a set of three policies which come to £124 per month but general quotes seem to start at £20.

What would happen if you had an accident and couldn't work for months on end.

My work could be pretty flexible around light duties (and presumably light pay). I have overpaid my mortgage and there are no fees in releasing what I have built up.

I think I'm talking myself out of this, aren't I?

In your situation I'd keep the cash and wing it.

I don't have income protection. I didn't when I was in a similar position to you (no dependents,no partner).
However I had a very open conversation with my parents when they said they didn't either and if something shocking happened to them, I'd have to bail them out!!!!
The broker may be biased because this will bring him commission. (I am very cynical).

I was covered on a group income protection policy through my work (one of the benefits they offered at the time I joined).

It meant that when I was diagnosed with ME I could reduce my hours to 60% and not lose 40% of my income - they made up my salary to 80% FTE. When going part time hadn't worked, and I'd been signed off sick, after three months I was paid PHI on top of sick pay (making my salary up to 75%). After sick pay had run out, I ended up on 50% salary for another three years. They then offered me a lump sum (which I took, after some negotiation) to end my employment, which DH and I have used to renovate the new house we've bought.

If I was going back to work now (still not well enough) I would definitely get something similar, particularly with all the reductions in benefits etc.

If you do want to cover yourself just incase you were to fall ill I would recommend a company called Exeter family friendly they offer a different style of income protection they don't cover your income they cover your expenditure. This can make the plan much more affordable.

I work for a broker and we tend to only sell income protection to single people with dependants. However me and my partner have an Exeter family friendly plan as he is self employed and the main earner.

If the broker is trying to sell you a multitude of plans that doesn't fit your budget then he isn't doing what is best for his client. I would recommend you have a chat with another broker in your area and see if they can find something that fits your needs and budget better.

Hope this helps.

If your mortgage allows it why not overpay by the money your policy would cost you instead, or even more if you can manage it? In the event of redundancy you may be able to use your overpayments to cover the interest for a while. My dp has been made redundant and we are using our overpayments to pay the mortgage while he finds a job. If you never get made redundant then your mortgage gets paid off early and you pay less interest.

Hi Livesy, I did try a local advisor and one through an online broker.

That is exactly my situation helen; a good overpayment has accrued and I can eat in to it without penalty (although I'll believe that if and when I see it).