Do you need life insurance or income protection? (2024)

Everyone faces uncertainty in life. But when it comes to your finances and health, sorting your life insurance is one way to lessen the blow.

Understanding life insurance

At its core, life insurance is a contract between you and an insurance company. But it’s also so much more than that, it’s there for peace of mind for you and your loved ones.

You pay premiums, and in exchange, the insurance company can pay out a lump sum to your loved ones if the worst happened during the term.

No matter what type of cover it is, the purpose remains to provide financial protection to yourself, and those who depend on you. But if you have people who rely on your income - a spouse, children, ageing parents, or anyone else - life insurance isn't just a nice-to-have; it's a must-have.

Unpacking income protection insurance

On the other hand, income protection insurance is there to give you a helping hand with your income if you're unable to work due to illness or injury. It's your financial safety net when life throws a curveball at you.

Life insurance vs. income protection: what are the key differences?

While both types of life insurance serve very different purposes, it's vital to understand their key differences. Life insurance pays out upon death, whereas income protection steps in when you can't work due to sickness or injury.If you have dependents or debts like a mortgage, life insurance should be non-negotiable.

If your livelihood relies heavily on your ability to work and earn, income protection is equally crucial. It’s best to seek help from a life insurance expert, so they can help guide your decision based on your specific circ*mstances.

Why not both?

In reality, life insurance and income protection insurance are two sides of the same coin. They work in tandem to provide comprehensive financial protection for you and your loved ones. Why? Because the unexpected doesn't discriminate.

So, it's not a matter of choosing one over the other. Instead, it's about crafting a plan for your future that can consider your circ*mstances, dependents, debts, and goals.

Have you heard about the benefits?

There are so many reasons why life insurance should be at the top of your to-do list. The pay-out is the reason that anyone looks into life insurance. But what about the added extras included in your cover?

To keep up with our ever-growing needs, many of the UK’s top life insurers include free extras in their cover*. Below are just a few examples of what you could get included with your policy:

• Access to online 24/7 GP appointments
• Second medical opinions
• Mental health support
• Tailored fitness and nutrition plans
• Personal nurses

There’s other types too!

Aside from income protection and life insurance, there are plenty of other types too! Here is a little summary of some of the other types of life insurance policies you can get:

• Critical illness cover is a type of life insurance that covers you against critical illness. If you were diagnosed with a listed critical illness, your cover could pay out a lump sum. This money would mean you’d have one less thing to worry about, during your recovery.
• Mortgage protection is there to cover the remaining balance of your mortgage. If the worst were to happen, this type of life insurance will pay out a lump sum. This means that your loved ones won’t be left with the financial burden of paying off the mortgage, after you’re gone.

What will your choice be?

Time waits for no one, and having the right cover in place is crucial.

If you’re only going to choose one policy, consider your biggest worry. Are you more concerned about leaving your loved ones with a lump sum, after you’re gone. Or is your biggest worry having to take time off work because of illness or injury?

But it’s important to remember; you don’t have to make a choice - if both policies fit within your affordability, this could be an option for you too.

*Benefits are not contractual and may be removed at any time