COVID-19 & Income Protection Insurance
Each year, around one million people throughout the UK find themselves in the position of being unable to work due to reasons of sickness or injury. While eligibility for Statutory Sick Pay (SSP) could mean access to £95.85 per week for up to 28 weeks, most people find that this sum of money is not enough to cover their weekly/monthly expenditure. For this reason, Income Protection (IP) policies have become a popular choice of financial insurance against the unexpected.
In March 2020, due to the COVID-19 pandemic, the UK went into lockdown. Unemployment rose by 120% between the start of lockdown and figures recorded in August. Increasingly, people are turning to IP, but there has been much confusion over how COVID-19 has affected IP policies (check out a company like this Income Protection provider for more info). Let’s take a closer look…
Is income protection insurance available in relation to COVID-19?
The Office for Budget Responsibility (which acts as the government’s spending watchdog), estimates that UK unemployment levels for 2020 will peak somewhere between 9.7% and 13.2%, with the most optimistic estimates suggesting that things will return to pre-crisis levels by 2022. Clearly, this is a cause for many people to feel anxious over job security and income.
The good news is that IP policies are available, offering varying levels of protection against a loss of income brought on by the pandemic. It should be noted that insurance policies have been updated in light of the global uncertainty, with things like longer deferral periods coming into play. Nevertheless, the message is that IP is still potentially available if you wish to protect your income from the effects of COVID-19.
What are the benefits of income protection insurance?
The obvious main benefit of IP is financial assistance when you need it most. Depending on your policy, income protection insurance could be available from as little as 24 hours from the point of losing your income, although many people choose to defer payment for a number of weeks to suit their circumstances. Also, if you are eligible for SSP, your IP policy will pay out alongside your statutory sick pay rights, meaning neither payment will be affected.
Is redundancy cover still available from insurers?
Due to the outbreak of COVID-19, policies dealing with issues pertaining to redundancy have been largely pulled by the insurance market – with no way of telling what is going to happen in terms of the market uncertainty surrounding things like how much of the UK’s workforce may be laid off, these policies cannot be offered. Instead, a suitable IP policy may be available – speak to a provider for direct and up to date answers.
IP can be thought of in similar terms to the government’s furlough scheme – both aim to protect a percentage of your income. With the furlough scheme coming to an end in October, and with only a reduced version of furlough available thereafter (paying 22% of wages along with a commitment from the employer), this could be the perfect time to look into your IP options.