Five reasons why you should consider Protection insurance

1. It pays out 90% of the time

This infographic below from LifeSearch shows that, on average, people believe only 38% of protection insurance claims get paid. But the companies who provide life cover, income protection and critical illness insurance and publish claims statistics for these products, actually pay 90% of all claims. A total of £6 million is paid out every day for claims on these policies.

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2. It’s not that expensive

According to industry figures, people spend an average of £27 a month on protection policies – about the same as half a tank of petrol in the family car, although, when asked to name a sum they would be prepared to pay, it is almost double that. Factors such as age, health and level of cover will affect the premium, but here at Marchwood we have found that the average monthly cost our customers pay per policy has hardly changed over the last few years. In some cases our clients have found that the cost of cover, especially for life assurance, is much lower than they had expected. As the infographic shows, a 30 year-old non-smoker can buy £200,000 of life cover for 20 years for just £10 a month.

3. The State will not always provide

It is true that you can claim Employment and Support Allowance from the State if you suffer illness or disability and are unable to work as a result. However, for those over 25, this is around £71 a week for the first 13 weeks, then just over £100 a week. But a protection insurance policy’s payout is likely to be much higher. Ask your financial adviser for an illustration based on your exact circumstances. Importantly, if you die, the State does not make a significant payout to your dependents – that will only come from an insurer with whom you have life insurance or family income benefit cover. A recent study by LV= found that the cost of raising a child to 21 years of age is now £222,458. If you were to die before your children have grown, who would pay that bill? Not the State, that’s for sure. A payout from your life insurance policy could make sure that your children’s future is secure.

4. Your employer will not necessarily look after you

With the UK’s economic recovery looking fragile, employers are still looking at cutting their staff costs to reduce losses or boost profits. According to a report by global insurer, SwissRe, more than 75% of all UK employers, especially small and medium-sized enterprises, do not provide life insurance, income protection or critical illness cover for their employees. If you think you are covered by the terms of your employment, you should check with an adviser to make sure that you have what you need. If you suffered illness or disability and were off sick long-term, you would only be sure of getting Statutory Sick Pay from your employer of £86.70 a week for the first 28 weeks. But a protection insurance policy’s payout is likely to be much higher and for longer.

5. It might happen to you

No one is immune from illness. Macmillan forecasts that, by 2020 nearly half the UK population will develop some form of cancer during their lifetime and many people are involved in accidents each year – some serious enough to keep you off work and reduce or remove your income. This is a particular risk if you are self-employed and need to be fit and well to carry out work for clients. It pays to consult a specialist protection insurance adviser like Marchwood IFA to find out whether you and your family are protected from life’s unexpected events!