Income Protection - the building block that almost every house needs but many are missing

Rory Brand

Rory Brand

Chartered Financial Planner

27 June 2022

There is one building block to financial security that so many overlook, it can keep the house afloat or bring it crumbling down around you if you choose to go without it.

Unfortunately, most of us aren’t millionaires or living off passive income streams that Tik Tok and Instagram would have you believe is as easy to cultivate as weeds in a garden. The vast majority go out to work and earn a living, whether that’s working in your own business or as an employee to keep the lights on and food on the table (the story of 2022).

You earn to sustain your ability to pay a mortgage, put money aside for retirement, pay the shopping, clothe the kids - essentially your income allows you to live.

Potentially, your ability to earn is your biggest asset, and the younger you are the more likely that this is true.

Ask yourself, if you sold your house and emptied your savings, how much would you have? Then compare it to how much more you expect to earn in your working life. Which is bigger? If it is your earnings, your ability to earn is a massive asset. Without it, the mortgage doesn’t get paid, the lights don’t switch on and your belly rumbles.

Famously, Heidi Klum’s legs were insured - or if Google is to be believed (and who knows) - Tom Jones’s chest hair, David Beckham’s legs, Keith Richards’ hands - ask yourself, why? My answer is that without them, it could impact their ability to earn.

Take someone aged 35, with a mortgage, one or two children, lots of plans, holidays, cars, plans to retire in about 30 years and has a little bit in savings. Let’s say they earn £50,000 a year, not an insignificant salary and certainly more than the average. They have the potential to earn £1.5 million in the next 30 years. If something prevented them from earning that, everything falls down. The mortgage, the things you wanted for child 1 & 2, the retirement plans… So why would you not insure your income? I honestly don’t know why people will sooner insure their goldfish, than what pays to pay the goldfish insurance.

The only people who don’t need Income Protection are those that have enough in savings, that you know you will be okay for the rest of your life and the retired.

If you aren’t in that position, you almost definitely need Income Protection. Even if you’re leading up to retirement ask yourself, “what could derail my retirement plans?”. If losing your income is the answer, and it probably is, you too need Income Protection.

What is Income Protection?

Essentially, it is an insurance that pays you an income if you are unable to work due to accident or illness until you return to work or retire. There are of course many variations and advice should be sought before entering a contract.

So, finally ask yourself this, “if Heidi Klum is insuring her earning potential, why aren’t you?”.

In case you are wondering, I have insured my earning potential or at least my ability to pay the mortgage, keep child 1&2 happy and a little extra on top. 

Get in touch

If you would like to discuss this further, please don't hesitate to get in touch with myself, a member of our Wealth team or your usual adviser.


Disclaimer: Johnston Carmichael Wealth Limited is authorised and regulated by the Financial Conduct Authority.

This communication should not be read as financial advice. While all possible care is taken in the completion of this article, no responsibility for loss occasioned by any person acting or refraining from action as a result of the information contained herein can be accepted by this firm.

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