Both life insurance and income protection are covers that can keep you and your family’s finances protected but in different life situations. You need to fully understand the differences between them so that you can decide whether you may need life insurance or income protection, or perhaps both, especially if you run a business.
Life insurance is important if you are the main earner
Life insurance is a type of insurance that provides your family with a lump sum of money in the event of your death. This can be of significant help to your family, as it can help them cover various expenses and potential debts.
They can pay the bills, cover their daily living expenses, pay off a mortgage, cover funeral costs, and provide your children with the necessary funds for education.
This cover can be especially beneficial if you’re the breadwinner in your household. By getting a life insurance policy, you can make sure that your family has a peace of mind regarding their financial situation in the event of you passing away. Top tip, if you think you need income protection compare on Money Expert for cheaper life insurance policies.
Income protection – a business owners sick pay
Income protection is a type of insurance that helps you cover your daily living expenses and potential debts if you are temporarily unable to work due to an injury or illness. For business owners, sickness can be end game if they are not properly protected, especially for sole traders who can’t rely on their team to pick up the slack.
This cover provides you with generally up to 75% of your salary every month for a particular period of time if a sudden illness or accident prevents you from working. The accident or sickness doesn’t have to be work-related. You can get income protection from lots of providers, Vitality offers a great policy which rewards you for physical activity.
Each cover is unique
To make the right decision about whether life insurance or income protection is best, think about where you are in your life – both covers are for different situations.
If you don’t have a family or any other dependents you would like to protect if the unfortunate event of your death, you may not need life insurance. Young, single professionals may not need to worry. But if you are married and have children, life insurance becomes more important.
For the self employed, particularly for sole traders its important to have income protection. That way, you can have the necessary financial support if an unexpected injury or illness ever puts you out of work. You can cover your daily expenses until you get back on your feet.
Married & Self Employed? You might benefit from both Many people get both life insurance and income protection policies. Whether or not you will do the same depends entirely on you, but you might want to consider it.