Income protection insurance is one of the most valuable policies which you can take out, but many people are not making the most of this crucial insurance cover.
This insurance product gives you an income if for some reason you cannot work. If, for example, you cannot work due to an injury or sickness, income protection can pay up to 75 per cent of your income every week or give you a single lump sum to cover your time off work.
A key benefit of income protection insurance is that it covers you regardless of where the injury takes place. Whereas worker compensation will only cover you for injuries sustained while at work, income protection can cover any injury which affects your employment, even when sustained in an incident not related to your employment.
While income protection is clearly valuable, it is also one of the least popular insurance policies. A survey by the UK’s Income Protection Task Force found that only 4 per cent of respondents had income protection, making it the third-least popular policy after payment protection and personal accident insurance.
Considering how important income is for maintaining people’s lifestyle, these low rates are a real risk for people working in dangerous professions.
Why do trades people need income protection?
While income protection has benefits for any employee, tradies in particular need to consider taking out an income policy, given the health risks which accompany their work. In an article by the Financial Times Adviser, Alan Lakey from Highclere Financial Services identified muscular-skeletal and stress-related issues as the causes of 40 per cent of all income protection claims.
With tradies often exposed to long hours of difficult labour, the threat of muscle damage or skeletal problems are both permanent issues. And as tradies often work to tight time frames, there is also a high risk of job stress which can also quickly lead to an insurance claim.
Managing these risks and taking out comprehensive insurance can make a big difference to your quality of life if an accident leaves you unable to work in your chosen trade.