A firm of independent financial advisers have stressed that purchasing income protection insurance is an eminently sensible decision for small businesses and the self-employed.
While critical illness cover provides a lump sum payment in the event of being forced to give up work, income protection is the only form of cover that can offer continuity of income, even when employment is no longer an option.
Harry Katz, principal of Norwest Consultants, explained that for the self-employed, the value of income protection is immeasurable.
"If you're self-employed and you can't work because you've had an accident or you've broken your leg," he commented, "or whatever it is you've done that has stopped you working…how on earth are you going to pay your bills?
"If you work it out, it's worth you paying an insurance premium to make sure that, if nothing else, you can pay your basic bills when you can't work…The logic there is inescapable and not terribly complicated."
His comments were backed up by Phil Jones, life and pensions adviser for Plan Insure, who admitted that many people failed to appreciate the worth of income protection insurance.
"People think to themselves: 'It will be good if I can have it but I can do without it'. But quite often, they say it's too expensive and think: 'I'll just risk it'; they'll take the risk as they think there's every chance they won’t be off work for a serious amount of time through illness or injury.
"They prefer to see something tangible, so they prefer to either invest [their money] into a pension or in some other way so they can see some sort of return at the end of it all."
He continued: "I don't know if some people see it as wasted money, especially if they don't claim, but who knows what's going to happen around the corner and that's what we're trying to get across.
Mr Jones also argued that many Brits failed to realise the profound effect of being force to quit work due to illness or an accident.
"Especially with self-employed people," he commented, "if they're going to be off work for a substantial amount of time and they've got no other earnings coming in, they're just going to get hit so hard.
"It's just that attitude of: 'It'll never happen to me'. People don't consider the fact that it could well happen to them and it does happen to people. It's just always the cost that puts people off."
A new report from Datamonitor said that the value of income protection policies collected by insurers fell by almost four per cent in 2006, to £5.4 billion
Talking to the Guardian, report author Andrew Haslip, said: "The UK creditor market is currently enduring the perfect storm of poorer penetration rates, weaker underlying credit markets, regulatory scrutiny and negative publicity. However, this should abate in the coming years."
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