It goes without saying that in the last few years we should have learnt to expect the unexpected.
Major events like the Brexit vote, Donald Trump’s election and the results of the recent General Election have left everyone reeling slightly – regardless of their own political persuasion or whether they felt those were the ‘right’ decisions – because the fact is, nobody really saw them coming.
An unforeseen General Election result, global political unrest and ongoing negotiations with the EU have all added to the feeling that none of us really has a handle on what’s going on at the moment.
Unexpected events in the wider world naturally have an impact on how we feel as individuals and how much uncertainty we feel in our own personal worlds. According to the Financial Times, Income Protection Insurance sales surged by 17% last year, potentially a sign that people are feeling the worldwide ‘wobbles’ in their own lives.
Could the dramatic rise in sales be directly related to the level of uncertainty people are feeling? Could the events of the last few years have given people a realisation that things don’t always turn out the way we expect? Perhaps the national and global instability makes us think more carefully about steps we can take to protect ourselves and our loved ones from unexpected bumps in our own roads?
Dealing with uncertainty
Psychologically, this idea holds water. When dealing with times of uncertainty, psychologists encourage people to take small steps to feel more secure in the things they can control, so they feel less overwhelmed by the things they can’t. By placing your focus on something that you can control, like purchasing an insurance policy to offset future risk, you could feel more proactive and less vulnerable.
You can’t control who gets voted in as Prime Minister or President, but you can control whether your family will be looked after financially if something happens to you. You can’t control whether the UK economy is stable, but you can control whether your own household income remains stable in the event that you aren’t able to continue earning.
If the last year has been a wake-up call for most of us that things can take a turn for the unexpected at any time, it stands to reason that making small steps to take action in areas of our life where we can take greater control and give ourselves more peace of mind might make us feel more secure, and Income Protection – as evidenced by the dramatic rise in sales – is one way to do that.
What insurance really means
Put bluntly, insurance means protecting you and your loved ones from specific areas of potential future risk. Insurance is a means of protection from financial loss – a form of risk management but, essentially, insurance is a pro-active action you can take now, to protect yourself from risk further down the line.
Companies may talk about policies and products, but what it boils down to is the assurance that should the unexpected happen, the right money will go to the right people at the right time.
As industries go, the insurance industry is particularly littered with jargon and hard to understand terminology, but the crux of the matter is that you are ‘buying’ the assurance that your family will be protected, or at least cushioned, from unexpected bumps in the road. The more uncertain we feel about the upcoming bumps in the wider world, perhaps the more we feel the need to protect our loved ones in ways that we can.
You can never truly shield yourself or those you love from the risk of ‘what happens next’ but insurance offers you the chance to at least lessen the risk of certain situations arising.
Why Income Protection?
Income Protection in particular is appealing to those who want to add a safety net to their situation, as it’s a policy which pays out for a prolonged time if necessary.
According to the Association of British Insurers, one million workers a year find themselves unable to work due to a serious illness or injury. Regardless of whether you have children or dependants, if you became unable to do your own job, you would need a way to pay your bills and Income Protection can help with that.
Income Protection helps you pay your bills if you can’t work because you’re ill or injured. It pays a regular income if you can’t work due to illness or accidental injury – it’s paid tax free and directly to you and can provide 50-60% of your normal gross income and will look after you for a long period if necessary.
A large part of its appeal is that the policy will pay out until you return to work or until your cover end date, unlike Accident, Sickness & Unemployment cover (ASU) which is typically designed to cover your basic bills for a maximum of 12 months, Income Protection can offer far more cover for a much longer term.
The Association of British Insurers asserts that:
“Income protection insurance is the most under-used insurance relative to need”.
Based on their research 60% of UK working households would see their income fall by more than a third if the main earner had to stop work due to ill health – a sobering statistic regardless of how unsettled we feel by the current wider uncertainties.
Even in times when the economy is stable and the political landscape is settled, taking out an Income Protection policy makes good sense and it’s worth considering if this type of policy could offer you and your family the security of knowing an income is guaranteed.
Even more pertinent in times of widespread uncertainly and a nationwide feeling of ‘What’s next?’, perhaps it’s not surprising that Income Protection sales have risen so much.
Will they continue to rise? Who knows? If the last year has shown us anything, it’s that nobody can truly predict what’s going to happen next…but it’s best to take steps to offset any risk.