According to a BBC news report, in October last year UK unemployment rates were the lowest they had been in seven years: “More people were working full-time in the three months to August, up 291,000 to 22.77 million compared with the same period last year. The number working part-time rose 68,000 to 8.35 million.” This is good news for the economy and reassuring to know but it doesn’t give us any idea about the number of people who have had to take time off work due to serious illness or injury.
It’s easy to think that nothing is going to happen to you but the Money Advice Service states that almost a million people every year “find themselves unable to work due to serious illness or injury.” Perhaps your company has a great sickness policy with full pay for employees who need to take time off, but do you know how long that lasts? And of course, you can claim statutory sick pay, but will it last long enough to cover your bills and other expenses?
Sadly, we can’t predict what will happen in the future and unfortunately illness or injury can happen to anyone. Investing in income protection insurance will ensure that you are prepared for such an eventuality and give you peace of mind and certainty of financial security no matter what the future brings.
Protecting your income will cover your financial commitments and allow you to ensure your loved ones are cared for. It will also enable you to keep up with mortgage payments or any other repayments you have to make, pay off debts and cover essential bills as well as daily expenses. Income protection offers an added level of protection and allows you to focus on feeling better and recovering from your illness or injury without the added worry of financial stress and the pressure of having to return to work to start earning again.
Income protection insurance will pay you a regular income until you are able to return to work or until you retire, die or the policy ends. It will not replace your entire income but you can protect up to 75% of it (before taxation). You won’t be able to claim from your insurance if you are receiving any sick pay from your employer; statutory sick pay usually lasts for about 28 weeks after you stop working. The good news is that you can claim as many times as you need until the policy runs out.
You can discuss your income protection insurance needs with our professional Rated Financial Advisers. To find out more about income protection and how we can help you, contact us today on 02084324566.
If you are anything like most UK citizens, your savings are probably not up to scratch. The Deadline to the Breadline report provides a frightening picture of the state of the average Briton’s precarious financial health, noting that most would run out of money in 29 days if their income were to suddenly stop. For working families (with breadwinners aged between 18 and 64) the picture is even more dire, with the time to breadline set at an average of two weeks. The survey also found that 36% of respondents had no strategy in place to cope with financial hardship.
The UK’s savings culture is worrying. The report found that the average monthly savings were just under £180. Almost 35% have no savings at all. With the cost of living increasing and benefits facing potential cuts, the need to protect your family’s financial health is vital, yet according to a Mirror poll only 4% of Britons have an income protection policy. In 2013, the average claim paid for individual income protection was £11,500. Such claims paid out on average for 230 weeks (more than four years), according to the Association of British Insurers.
Income protection cover provides protection for accident, sickness or unemployment or a combination of these, granting the insured a monthly or weekly payout for a period of time. While the state does offer Employment and Support Allowance to help those who cannot work, a report by This Is Money noted that this amounted to about £71 a week for the first 13 weeks and approximately £100 a week thereafter, which may not be sufficient to cover monthly expenditure, especially if the injured or unemployed person was the only breadwinner. Despite the potential benefits, income protection insurance is still not widely known or used, with Swiss Re reporting that, in 2014, a total of just 96,889 such policies were sold in the UK.
For information on income protection cover from Rated Financial Advisers, contact us today on 02084324566. Visit our site regularly for more interesting reads about the UK economy and its impact on your finances.