Income Protection Insurance should be better described as Income Replacement Insurance in that it is designed to replace lost income if you are unable to work medium and long term due to illness or injury. It is also sometimes known (in older finance circles as Permanent Health Insurance PHI).
How long could you survive financially if your income fell to £116.75 per week?
Statutory sick pay (SSP) is paid by your employer and not the Department for Work and Pensions (DWP) as many may still think. It is a legal requirement for employers to pay you from day 4 of sickness if you are unable to work. Smaller employers may be able to reclaim this from the government. SSP is currently £116.75 per week, that’s not even £500pm.
SSP is payable by your employer for a maximum of 28 weeks.
After that, you may then be able to claim Employment and Support Allowance or Universal Credit. Either way, it is unlikely to cover your costs.
Income Replacement Insurance
Who Needs Income Replacement Insurance?
If you are working and you have financial responsibilities that cannot be covered by your savings or would exhaust or damage your long-term savings for retirement, then you need insurance.
This is serious matter and if you pay more for motor insurance or your television subscriptions or your online shopping orders than you spend on income replacement insurance email then you are a fool or clearly do not care about your financial security or indeed the welfare of your family. Even if you can just afford £20 £30 or £50pm then get some income replacement insurance protection.