Best Insurance

Household Incomes To Fall By 7.4% By 2012 – Are You Prepared?(02-Dec-2011)

As per the latest reports from the Institute of Fiscal Studies (IFS), the chancellor’s economic plans will lead to a sharp drop in household income.

In the current state of economy with highest levels of unemployment, sustained inflation and low lending levels by the bank to both individuals and companies, this was the last blow. What this really means is that not only is it more difficult to find new jobs if made redundant but even if you are securely employed, the external environment can take its toll on your job and more importantly the money you take home.

The 7.4% fall in income will mean that affordability in general will reduce and it’s more important than ever for households to prioritise their spend. In terms of protection insurance, this goes back to the hierarchy of protection insurance that people invest into. When the market was booming and people were investing, there were plenty of jobs available and people never had to worry about protecting their income and hence the investment in terms of protection insurance was always towards life insurance followed by critical illness covers and then income protection. However with the uncertainty in the job market and reduced affordability, it is important to review what to spend the money on and how to prioritise on various types of protection insurances.

Best Insurance specialises in various types short term protection insurances and long term protection insurances. In terms of short term protection insurance – the most common once are income protection insurance and payment protection insurance. Most of the income protection insurance helps customers to cover upto 50% of gross income and most of the payment protection insurances helps cover upto 60% of gross income or 100% or mortgages, loans or rents whichever is lower. The income protection insurance and payment protection insurances usually have 12 months benefit periods. While some insurers also tend to provide upto 18 months benefit periods, such policies tend to be more expensive and customers would need to list their outgoings. Increasingly there are customers who want more than just what is needed to cover their mortgage; loan or rent and Best Insurance have launched a new payment protection plus insurance. With this type of payment protection insurance, customers can also cover their outgoings upto a maximum of 150% of their mortgage, loan or rents. These products are also referred to as income and commitment protection insurance as it does both – protects income and also commitments.

It is vital for every household to ensure that they have sufficient savings to see through if they lose their jobs or made redundant and for those people who don’t have savings, it is prudent to invest in an income protection or payment protection type of insurance.