Life insurance vs income protection

Do you know the difference between life insurance and income protection?

Life insurance

Life insurance pays out a lump sum to your loved ones if you die during the policy term. You could either be covered for a fixed length of time (such as 10 or 25 years), or for the whole of your life. It’s sensible to get cover if you have any dependents because life insurance could help them to stay living in your home if you pass away.

Income protection

Income protection provides a portion of your income if you are unable to work due to illness or injury. The insurer will make monthly payments to you until either the term ends, you die or return to work. There will usually be a waiting period before you can start receiving payments.

Income protection is recommended if you would struggle to cover essential living expenses if you were unable to work - for example, if you are self-employed, have limited savings or are the sole earner in your household.

Do I need both?

Income protection provides you with support during your lifetime, while life insurance safeguards your family in the event of your death. Both policies can offer peace of mind that you and your loved ones will be protected in times of need.

As with all insurance policies, conditions and exclusions will apply.

Sources:

https://www.legalandgeneral.com/insurance/life-insurance/definitions/life-insurance-vs-income-protection/