Income protection: a problem for your 30s?
Income protection is an insurance product designed to pay an income if you can’t work for any reason. It usually kicks in if you are out of work for six months or more.
While the inability to work is usually seen as an age-related problem, statistics from healthcare and protection insurer, The Exeter, showed the average age of claimant overall for IP was 40, and on certain types of products, this dropped to just 33.
The group said there was a growing discussion within the industry on how to make protection more relevant to the under-35s, who are more likely to insure their mobile phone than protect themselves and their family.
The claims data also provides a picture of the main conditions and illnesses that prevent healthy individuals from working. Musculoskeletal problems, fractured/broken bones and back and spinal conditions key reasons to claim, accounting for 37%. Mental health related claims increased for the third year in a row and now account for 10% of all IP claims made to The Exeter, double the 5% the represented in 2016.
Andy Chapman, CEO of The Exeter, said: “In your early thirties you’re probably not expecting to be too ill to work, but the trend we see this year on our plus products is that for many that is now a startling reality. Should this trend continue, it’s further evidence that IP should be a serious consideration for the younger market”
Income protection tips
- The younger you are, the cheaper the policy, so it is worth getting cover sooner rather than later.
- Check whether the policy covers against not being able to do any job or just your own job.
- People sometimes think that their employer will cover them in the event of a serious illness. However, this isn’t always the case or it may be capped. Check.
- Check the waiting period before any claim is paid out. Your employer may have a sick pay scheme and the two should match up. You may also have savings that could support you for a while.
- If you are self-employed, consider a shorter deferment period as you will not benefit from an employer scheme.