When deciding whether you need income protection it is worth considering the way the human brain is programmed as it has a significant ‘optimism bias’, which explains behaviours such as people gambling or even walking toward machine guns in World War 1, as in both examples they genuinely believe they would be the lucky ones, despite strong evidence to the contrary. The reality is surprising.
- 10% chance of being unable to work for more than six months
- Average income protection claim is over seven years
- Maximum government sickness benefit around £100 per week
- How long could you really live off your savings?
- Could a family member cover your outgoings indefinitely?
- Which? magazine recommends every working adult should consider income protection.
- More houses repossessed due to illness than from unemployment
When considering whether to take out income protection you should carefully consider both the risks of being unable to work and also the likely consequences if that happened. The simple fact is that you are significantly more likely to be unable to work due to accident or illness for a prolonged period and suffering from a critical illness or death.
- 1 in 10 people have been unable to work for over 6 months due to accident or illness
- Each year, around a MILLION workers become ill or disabled and still are a year later
- Around 65% of people off work for over 6 months will still be not working 5 years later
A 2011 survey by the Guardian/Unum (a specialist income protection provider) showed that 1 in 10 people had been unable to work due to incapacity for a period of 6 or more months, so not exactly lottery winning odds. An even more worrying statistic is that the average claim for income protection policies is around 7 years!
The table below shows some real life examples of income protection claims.
| Age at Claim | Gender | Occupation | Length of Claim | Cause of Claim | Last Monthly Benefit | Total Amount Paid So Far |
| 31 | Male | Carpet Fitter | 15 Years |
Brain damage from road traffic accident |
£303.00 | £55,449.00 |
| 43 | Male | Accountant | 7 Years | Cyst removed from the Brain | £3,194.00 | £255,520.00 |
| 46 | Female | Veterinary Surgeon | 12 Years | Arthritis | £369.00 | £51,291.00 |
| 48 | Male | Estate Agent | 14 Years | Heart Attack | £4,883.00 | £805,695.00 |
| 48 | Male | Doctor | 1 Year | Depression | £3,357.00 | £53,712.00 |
| 49 | Male | Physiotherapist | 3 Years | Depression | £1,942.00 | £73,796.00 |
| 49 | Male | Quantity Surveyor | 7 Years | Stroke | £2,528.00 | £207,296.00 |
| 51 | Female | Marketing Consultant | 2 Years | Breast Cancer | £2,434.00 | £48,680.00 |
| 59 | Male | Solicitor | 1 Year | Parkinson's Disease | £2,156.00 | £26,452.00 |
| 59 | Male | Roofer | 2 Years | Torn Achilles tendon | £1100 | £25,980 |
If you are curious as to what your precise risk of being unable to work for a prolonged period, suffering a critical illness or of dying, input your own details to see the often-surprising reality, if you dare!
Risk Calculator
The fall-back position for many people is to rely on state benefits, in the event of incapacity. The information below shows why this is a very risky strategy and with forecast government spending cuts only likely to cause downward pressure on the real value benefit levels, this is only likely to get worse. Ask yourself this, could you survive on the average yearly incapacity state benefit of £5200, if you’re lucky enough to qualify for benefits?
It may come as a surprise that the leading reason for mortgage repossessions is not unemployment, as most people believe but is actually caused by people being unable to work due to accident or illness.
