01 Jul 2019
Which is better, Serious Illness or Income Protection? It depends on what you need, but here's a bit of information on both and how they work.
One common question that we get from clients looking for a solution to protecting their financial well-being in case of illness or injury is whether it is better to choose Serious Illness cover or to take out an Income Protection policy. In many cases, the answer can be both if at all possible. It’s important to consider the differences between the two to find out what option is best for you.
The biggest difference is in how the policy is paid out:
Income Protection - Offers ongoing income replacement in the face of long-term illness until retirement age.
Serious Illness Cover - Pays out a lump sum amount. If you have this coverage as part of a more comprehensive life insurance policy, this may change the amount of coverage remaining on the policy.
Though income protection is often perceived as expensive, it can be quite affordable depending on your circumstances, and of course our advisers will work with you to get you the best possible price. We feel that the added expense is, in many cases, well worth it, given the long-term benefit you receive from it. In many cases, it’s the coverage choice that allows our clients to remain in their home and pay their mortgage, continue to pay for their children’s schooling, or just keep living at the same standard they are used to during a long-term illness or injury.
Serious Illness cover, which can either be a part of a broader life insurance cover policy, as mentioned above, or taken ‘stand alone’ is helpful in that it gives you a lump sum payment straight away, helping to cover any large medical expenses and create peace of mind in the face of what is generally a difficult time.
In some cases, you may not wish to take both types of coverage, and it’s important to discuss your goals and concerns with your adviser when you are discussing what coverage is right for you to ensure that you are getting the products that will most effectively help you maintain your lifestyle if you are ill or injured.
Written by Finbar Egan