When you take into account how much you rely on your income it makes sense that you should protect it in case you should lose your income. You could lose the income after suffering from an accident or an illness. You could also lose it as a result of unemployment through such as being made redundant. One way of protecting this is to take out income insurance protection against unemployment and incapacity.
Income insurance protection against unemployment and incapacity means that you would have an income to replace your own and this would be tax-free. You would have to wait for a period of time before you are able to put in a claim on the policy and then it would payout for a certain period of time. Usually you would have to wait around 30 to 90 days and then you could put in the claim. Following commencement of payout it would then continue for between a period of 12/24 months and after this time it would stop. However usually this is ample time for you to have made a recovery or to have found work again.
With the policy there would be no worrying about how you would meet your mortgage payment when it was due. You would be able to continue meeting the payment and ensure that you are not going to fall into arrears and so risk losing your home to the mortgage lender. Mortgage lenders will usually try and help you reach an agreement by catching up on the arrears while at the same time paying the mortgage. However without a regular income there would be not way you could make such an agreement and if you continued to fall behind the lender would start repossession proceedings.
You would also be able to meet any loan repayments or those of credit cards with the income the policy supplied. Again keeping up with these is essential as at the very least you would have your credit rating affected. A poor credit rating would mean that you could find it very hard to get approved for credit in the future as this is what all lenders take into account. If you have had your credit rating affected by missed payments on loans or credit cards then it is highly unlikely that your loan application would be looked on favourably.
Income insurance protection against unemployment and incapacity should not be confused with a very similar named product which is income protection insurance. This policy would provide you with an income but it would not protect you against unemployment caused by such as being made redundant. There would be a longer period of deferment but the cover would payout for a lot longer period than income payment protection would. In fact once the policy had started to payout it would then continue to do so for up to the age of retirement it need be. You would have to look into what both policies offered to decide which would be the most suitable for your needs before taking it out. An ethical provider will supply you with all the information you need on their website so you can make the right choice.
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