Protecting Your Income

If COVID-19 has shown us one thing, it’s that the future is unpredictable and nobody should take good health for granted.

How long could you continue to pay your bills and maintain your quality of life if you were unable to work? Research by leading insurer Legal & General shows the average UK household is just 24 days away from the breadline! While you may have sufficient savings to get by on a reduced/no income for longer than this, there will come a point for almost everyone when savings dry up…

When someone says life insurance, people typically think about cover in the event of death. While these policies are brilliant, they don’t do anything to help someone who’s suffered an accident, sickness or any disability meaning they’re unable to work. This is where an Income Protection policy comes in.

It’s a harsh reality that just because your income has stopped, it doesn’t mean your outgoings are going to change. Statutory Sick Pay (SSP) from currently stands at £95.85/week in the UK so for the vast majority of families and individuals, this isn’t going to scratch the surface of what’s needed to simply get by. Income Protection allows you to ensure yourself for any amount up to approx. 60% of your income. This is paid to you tax free upon being signed off work by a doctor for any of the reasons mentioned above. The policy can pay out up until your planned retirement age and, if necessary for cost reasons, for just a set number of years from the onset of a claim.

Income Protection policies are applicable for all but especially for those households where one individual is the majority earner and also for people living on their own. In these circumstances, if you lose this income, how would you and/or your family maintain their quality of life? With an Income Protection policy, a premium is paid to the insurance providers just as you do when insuring your homes, cars, pets, etc. Insuring the biggest financial asset in your household – yourself – is surely worthwhile is it not?

Now many larger employers offer generous sick pay schemes where they will pay your full or half salary for a set period of time. While this is great, it will eventually run out and if you are not able to return to work, this simply delays the problem. An income protection policy lets you set what’s called a deferred period meaning your pay out won’t begin until your sick pay ends. The longer the deferred period, the lower the relative premium as from the insurance providers perspective, there’s less chance of them needing to pay out.

Whether you’re employed, self-employed or the director of a limited company, there are bespoke products on the market which can be tailored to fit your needs and budget. As an example, a 30-year-old individual looking to ensure themselves for £2,000.00/month until age 70, with a deferred period of 3 months, would be looking at paying under £35/month. That’s financial security for less than drinks and a meal out.

These policies literally change lives; to protect your income and provide comprehensive cover and financial security for you and your family, get in touch – we’re here to help.