Income protection insurance pays your bills if you fall ill and are unable to work. Whilst many homeowners with a mortgage have this insurance in place; it’s not as common amongst those who rent their homes.
Income protection insurance that pays out if you’re unable to work due to an accident or illness could allow you to keep up with your rental payments and avoid eviction for non-payment.
If you’re a tenant, you may wonder if this type of insurance would be right for you. Let’s look at what you need to know.
A Closer Look at Income Protection Insurance
An important thing to consider is that income protection insurance won’t replace your entire salary. In general, people will receive between 50% and 65% of their earnings before tax. This amount is lower as it considers that you should be able to claim state benefits from being unable to work, and the income from the policy is tax-free.
If you’re thinking of taking out an income protection insurance policy, there are some things to consider first:
- Many employers offer income protection insurance, so you may already be covered. Check your contract or employee handbook to find out, and if you’re still unsure, contact your HR department to ask.
- Think about how much money you have in savings. Often people with substantial savings choose not to take out income protection insurance as they would rather rely on the savings instead of paying for an insurance policy they may never use. If you are considering using your savings as an option, you should work out how long the savings would cover your bills if you were off work long term.
- Can you afford to pay for income protection insurance? Ensuring you’re able to comfortably pay for income protection insurance over and above your usual outgoings is crucial. If you can’t afford it now but want the reassurance that comes with it, are there any things you could cut back on to make it affordable?
- Check the terms and conditions of any policy thoroughly to ensure it will meet your needs in the event you need to claim on it. Ensure you’re aware of precisely what you can and can’t claim for and how much you’re likely to receive if you do need to claim.
If you’re a renter or looking for a property to rent, why not browse our range of properties available? We have properties of all different sizes and to suit all budgets. Give our team a call to find out more on 01985 881 544.
* The content in this blog does not constitute any form of independent professional financial advice, recommendation, representation, endorsement or arrangement by us and is not intended to be relied upon by you in making (or not making) a specific investment or any other decision.
