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If you became unable
to work because of an accident, illness, or injury, would you still
be able to provide for your family? For most workers in the UK,
losing the ability to work would be a financially devastating event
- they would have no reliable means to pay their bills, buy
groceries, or take care of their financial obligations. For this
reason, UK income protection insurance is critical for anyone who
depends on a job for economic survival.
The main purpose of UK income protection insurance is to provide a
stable, tax-free source of income if you become unable to work
because of an illness or accident. This not only helps you take care
of your financial needs; it also reduces the stress that often comes
with losing a regular, steady source of income. Recovering from an
injury or illness is stressful enough without having to worry about
how you are going to pay your bills.
Ordinarily, UK income protection insurance will allow you to replace
up to 50 percent of your income; however, there are plans available
that will allow you to increase your protection to 65 percent.
Because the payments are made on a tax-free basis, the reduction in
income will be partially offset by the fact that you will not have
to pay taxes on payments received through the insurance plan.
Without the reduction, it is possible that you would be financially
better off than when you were working - a situation that goes
against the very foundation of insurance.
There are two primary types of UK income protection insurance. The
first type can be taken out until you reach retirement age. If you
suffer an illness or injury which renders you unable to work, this
type of insurance plan will continue making payments until you are
at the age of retirement. While this plan provides the maximum level
of protection, it is also the most expensive.
The second type of plan replaces your income for a short period of
time, usually twelve months or less. If you become unable to work,
this type of UK income replacement insurance gives you a financial
buffer while you are recovering from your illness or injury. It is
also considerably less expensive than long term income protection
insurance, making it an affordable option for those who need limited
While getting UK income protection insurance will add another
expense to your monthly budget, it can be a life saver if you ever
suffer a significant illness or injury.