Arranging the right type of protection insurance can seem like a bit of a maze. If this is the first time you have considered it then hopefully you will find this a useful aid and it will point you in the right direction.
When considering arranging protection insurance it’s important to take into account your circumstances and what situations could leave you in a vulnerable financial position.
Do I need Income Protection?
For most single people the most important product you should consider is an Income Protection policy.
Income Protection Insurance helps to protect your income if you were unable to work, as the result of an accident or sickness. The most common reasons for claims are due to back problems and mental health issues.
This cover should be arranged to dovetail any sick pay arrangements provided by your employer so that the benefit starts to pay out as your sick pay stops. This cover would probably be even more relevant if you are self-employed or if you are a director of a small business.
Having an Income Protection policy in place would mean that you will still benefit from the security of an on-going income and you can concentrate on getting better without the stress of worrying about money.
Do I need Critical Illness Insurance?
In some circumstances having a Critical Illness Insurance policy would also make sense. This type of policy would pay out a lump sum in the event of you being diagnosed with an illness covered by the policy.
Most critical illness policies cover between 40 – 80 specific conditions, but it would pay to take advice as the ‘policy wording’ can differ tremendously between one policy and the next. All Critical Illness Insurance policies cover certain cancers, multiple sclerosis, heart attacks, strokes, kidney failure, coronary artery bypasses, and major organ transplants.
This type of policy would probably not cover you if you had a bad back or were diagnosed with stress or depression, unless the diagnosis resulted in you being assessed as never being able to work again.
Critical Illness Insurance cover may well be suitable, probably as well as an Income Protection policy, if you have a mortgage. For example, if you were diagnosed with cancer, and the diagnosis meant that you were unable to work for a year or two whilst you underwent treatment, an Income Protection policy would start paying you a monthly income, and a critical illness policy would pay you a lump sum, which you could use to pay for treatment, pay off some or all of your mortgage, or simply put it into your bank.
Do I need Life Insurance?
Life insurance is probably the least relevant policy for a single person. Life cover is generally suitable if someone has dependants that need the security a lump sum, in the event of you passing away. Probably the only circumstances where life cover is suitable if you are single would be to pay off a mortgage or to leave a lump sum for someone specific in the event of your death, but even in these circumstances it would probably be worth you taking some advice.