These days the average household is very different from the traditional families of the past. Whereas there used to be one primary breadwinner and one homemaker, it’s now very common to see households rely on two incomes to live comfortably (or just get by!). Two thirds of Brits are living as a couple, and of that 51% of these couples are both currently working. But why is this worrying? Well, without savings or protection insurance, millions could be at risk financially if one of the main earners was unable to work for a period of time due to an illness or accident.
The Money Advice Service advises the provisions of 90 day’s worth of outgoings in savings to protect against any financial “shocks”. But lots of couples don’t have this, with significant a proportion saying they’d have to make major changes if they had to rely on only one income. And whilst this would be a terrible thing financially, the impact of this is also bad for the relationship with 42% saying if one of them couldn’t work, it would seriously strain the relationship.
Even despite the clear reliance so many households have on having two incomes, not a lot actually have income protection which is quite worrying as it leaves them vulnerable if one member of the household is unable to work for a prolonged period of time. 59% of couples claim neither they nor their partner has any form of income protection.
If you live in a household that is reliant on two incomes to get by, it is vital that you consider how you would survive financially in a worst case scenario. With so many households relying on two salaries to make ends meet, it has never been more important for couples to protect their joint incomes.
IP (short for Income Protection) insurance is a form of insurance that helps support you financially if you have time off work and suffer a loss of earnings due to injury or illness, but only for them reasons, so this does not apply if you are made redundant. IP covers most illnesses that leave you incapable of work. What that means depends on your individual policy, so that could include something stress related, for example.
What are the different types of income protection?
There are two types of Income protection policy: 1) Short-term Income Protection policies, which are otherwise known as Accident, Sickness and Unemployment (ASU) products, will generally only pay out for one or two years; 2) Long term Income Protection, these will usually provide a regular income if you are unable to work due to illness or disability until you are well enough to return to work, or until the end of the policy term.
If you are reading this now and don’t have income protection, don’t worry! It’s never too late to get it so consider discussing this with your partner.