Have you got a plan b?

What is your plan ‘b? 

Each year over one million people in the UK find themselves unable to work due to sickness or injury.  

Some of you reading this may have a life insurance policy, perhaps taken out to repay your mortgage in the event of your untimely death. However, in the event of illness or injury what is your fallback position?  

The ‘Family Spending in the UK’ report states that it costs £572.60 per week to run the average family home yet, research tells us that only one in ten of us protect our income.  

Some of us may be fortunate enough to have an employer that pays an enhanced sick pay package, many of us will not. How long does the sick pay last, 4 weeks? 3 months? Perhaps longer for the extremely fortunate. The rest of us will have to rely on statutory sick pay or put another way, £96.35 a week for up to 28 weeks.  

Would that be enough to maintain your family life, to keep that roof over your head and to feed the family? I doubt it.  

Savings could well be an option for some but nearly half of UK households have either no savings or less than £1500. Furthermore, 44% of people would struggle with a loss of income within 6 months.  

Without adequate protection in place what is your plan ‘b?’  

Many of us don’t think twice about insuring our pets or home contents yet we fail to ensure our most valuable asset, ourselves.  

The average UK salary is £30,000 which equates to well over £1 million pounds throughout your working lifetime; surely that is worth protecting?  

If you had a machine on your kitchen table that provided you and your family with their daily income needs, would you insure this machine to make it sure it continued to work no matter what? 

For business owners reading this there is a tax efficient solution that would allow you to secure this valuable cover through your business and save up to 50% on cost over the more traditional method of paying for these policies out of your taxed income.  

Due to Covid-19 and the resulting lockdowns over the last 18 months the vast majority of us will have thought about our own morbidity and mortality.  Many will have had a long and hard think about our own financial situation and how we and our families would cope if the worst happened. 

I will finish this blog with the same question I started with; What is your plan ‘b’ should you be unable to work due to accident or sickness? 

Whether or not these types of policies would be suitable for you, depends on your individual financial circumstances. The information given in this article should not be construed as financial advice. 

MHA Moore and Smalley are authorised and regulated by the Financial Conduct Authority (448716).