Common Reasons Why Business Owners Don’t Have Income Protection

With a 9% increase in 2022 from the previous year, income protection is becoming increasingly more popular.

As a type of policy that is more likely to be claimed on, individuals are seeing the value of income protection when they’re ill or suffered an injury. However, people think this is all too good to believe, especially business owners who think they’re unable to get income protection.

We’re going to go through some of the misconceptions about Income Protection and break some of the stigma that employed, self-employed and business owners may have around this type of protection insurance policy.

Don’t think they’re able to afford it

How much you will be paying for income protection will depend on how much you would like to be paid per a month.

You can have income protection that covers your full monthly salary, or you can choose to receive a certain amount (e.g. cover your monthly mortgage payments).

The cost of your income protection will depend on several factors such as your medical history, occupation, age, how long you can wait before payments start to be paid and how much income you’re looking to cover.

Think they will never need it

You may likely become ill or injured at some point during your work life. Especially if you play sport over the weekend, take part in charity challenges or a frequent gym go-er.

Also, your occupation could also increase your chances of being ill or injured. 63% of sales professionals struggle with mental due to high pressure environments and long hours. Additionally, if your job involves a lot of travelling, your chances of being in an accident will be significantly higher compared to someone who may be mainly office or home based.

Don’t understand how it works

Income Protection may not be a policy that many people know about, but most Protection Insurance Consultants would be more than happy to explain what the policy is, compare the differences between other policies and explain the benefits and considerations of the policy.

Quick overview of what Income Protection is:

  • Income Protection is a policy that will provide you with a regular replacement income in the event that you are too ill or injured to work. The amount that you receive each month will be up to you however it’s usually around 60%-80% of your monthly salary.
  • An income protection policy can be claimed at the same time that you’re claiming any sick pay.
  • This type of policy is available for those who are employed, self-employed, directors and business owners of a business.
  • The deferred period can be as little as 1 day, but individuals usually choose a 4 week deferred period.

*Deferred Period: The waiting period before you get paid from your business income protection insurance.

It’s not the type of protection they’re seeking for their business

If Income Protection isn’t the type of protection insurance that you’re looking for, there is a full suite of protection insurance policies available: Life Insurance, Critical Illness Cover, Key Person Insurance, Shareholder Protection, Relevant Life Insurance and Business Loan Insurance.

The range of policies available can be confusing but speaking to a Protection Insurance specialist, they will be able to explain the differences between the policies and recommend policies that are best suited to your requirements.

Looking to cover their employees’ absences instead of their own

There are two types of income protection – one which covers you as an individual if you were off work due to injury or sickness and the other one will cover your employees if they’re off work with the monthly benefits going to the business.

This type of policy is called Executive Income Protection. In the event that your employees are on short or long term sickness or unable to work due to injury, the business will receive a monthly benefit to support cover their sick pay and loss of revenue due to their absence.

In 2022, an average of 2.5 million UK employees were signed off sick meaning the average number of sick days taken per worker was 5.7. Would paying all your employees at least 5.7 days of sick pay put a financial strain on your business?

Get in touch with our team

If you would like to get in touch with our team to discuss your mortgage and/or protection insurance requirements, don’t hesitate to get in touch with our team. Call us on 01270 443510 or complete contact form and we’ll be in touch with you as soon as possible.

Financial protection policies typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.