Income Insurance
As the cost of living continues to spiral higher and higher, many are only just starting to realise that in the event of being unable to work, or seeing their income slashed dramatically, the state system may not be in a position to cover the short fall. This has led to an increased interest in income insurance, an area of the market which is often mistaken for health insurance, disability insurance, etc.
Income insurance is a long term plan to assist those who are not able to work for whatever reason, and require additional income to cover their liabilities and cost of living. For only a few pounds a week it is possible, under certain circumstances, to create a long term income stream to make up any short fall. In what circumstances would this occur?
As employment is the main income stream for the vast majority of the UK population, an income insurance is most likely to be utilised in the event of an accident, illness or some other reason for not being able to continue in employment.
As you can imagine the insurance companies have strict guidelines as to the basis for claiming income from your policy, and while there is the opportunity to receive an income for many years - well into retirement - the conditions can be fairly rigid.
Will State Benefits Not Cover Any Shortfall?
Unfortunately while there are many state benefits applicable to those unable to work for a variety of reason, these benefits are falling in value in relative terms as the cost of living continues to increase faster than benefit payments. Many of these benefits are only short term, unlike income insurance which can introduce a long term income to your life.
Successive UK governments have been active in encouraging people to look at their long term financial planning, as it seems inevitable that the state benefit system will not be able to cope with more people living longer, and increased benefits liabilities. While benefits will be available in the future, they may well not have the same impact as they have had in the past.
Conclusion
It is vital that income insurance is not confused with health and disability insurance, which are both normally only short term arrangements. Many people make the mistake of missing the long term picture, and can often be left in financial difficulties as and when their short term arrangements end.
