Income protection insurance

This provides a regular income if you’re unable to work due to an injury or illness. You can get policies that replace a percentage (usually up to 70%) of your lost income until you return to work, reach retirement or die, or until the policy term ends. Or, you can opt for a cheaper policy covering you for a limited period of time. Sylvia and Jim are not unusual in the fact they didn’t have income protection insurance. Research by the insurer Drewberry revealed 17.2% of people have never even heard of income protection insurance.

Life insurance

This provides either a single lump sum or a regular income to your loved ones when you die. This money can be used to pay off your mortgage or provide an income to cover ongoing household expenses.

Serious and critical illness insurance

This provides a single lump sum on the diagnosis of a range of serious, non-fatal conditions, including heart attack, stroke and cancer. It often comes as an optional extra to life insurance but can be bought separately.

So, do you really need protection insurance?

Figures from Aviva suggest that a lot of people do. In 2022, they paid out a total of over 1 billion to over 50,000 customers in the UK. And that’s just one insurer.

But do these policies pay out when you need them?

In 2022, Aviva paid out on 99.4% of life insurance claims, 93.5% of critical illness claims and 94.3% of income protection claims. Meanwhile, figures from the Association of British Insurers and Group Risk Development show that, in 2022, the insurance industry paid out a record £6.85bn in protection claims. These figures suggest insurance companies do generally pay out.

There are also simple steps you can take to reduce the chances of a denied claim. According to Aviva, the most common reasons for refusing to pay out are:

• incorrectly completed forms
• failure to disclose all the facts up-front
• not meeting the policy criteria for a pay-out

Getting help from a professional will help ensure you find the most appropriate cover for your circumstances and avoid doing anything that might jeopardise a potential claim.

If you would like to find out more about the income protection, critical illness or life insurance cover, we’ll be happy to help.

Key takeaways:

• When you take out a mortgage, as well as insuring the building and contents, it’s worth thinking about getting protection insurance to safeguard your home in the event of you or your partner becoming critically ill or dying.
• The three main types of protection insurance to consider are income protection insurance, life insurance, and serious and critical illness insurance.
• Getting help from a professional will help ensure you find the most appropriate cover for your circumstances and avoid doing anything that might jeopardise a potential claim.



Approved by The Openwork Partnership on 04-01-2024