Income Protection – and why you need it!
Income protection is an insurance policy that pays out a percentage of your salary should you be unable to work due to accident or sickness. It is, in my opinion, the most important insurance policy you can have if you are of working age, and I will explain why.
Let’s start by asking you a question; what is your plan ‘b’ should you be unable to work due to accident or sickness?
For those of you who are employed, perhaps your employer offers an enhanced sick pay package, something like 4 weeks full pay or maybe longer however, in reality a mere 10% of UK employers offer some form of sick pay package. Statutory sick pay is a mere £95.85 a week and payable for up to 28 weeks yet the average family weekly spend is estimated to be £585.60.
Savings could well be an option for some, but nearly half of UK households have either no savings or less than £1,500. Furthermore, 44% of people would struggle with a loss of income within 6 months.
How long would your savings last? One month? Two months? What then?
Many of us insure our homes and contents, our pets, the boiler, or the car to name a few. Some of these insurances are required by law, some we can chose the level at which we insure, for example, car insurance can be on a comprehensive cover basis or third-party fire and theft. We chose to insure these things or events to give us peace of mind. Peace of mind should the worst happen. Peace of mind that if the dog or cat become seriously ill or have an accident that we do not have to ‘find’ the money to cover the vet’s bill.
In the UK, there are an estimated 250,000 jobs lost per year and around 2 million people are not working at any one time due to sickness or long-term disability.
The average UK salary is £30,000 which equates to well over £1 million pounds throughout your working lifetime, yet worryingly, when we consider all what I have just written, only one in ten protect their income.
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.
For an initial, free, no obligation chat around your protection needs please get in touch with Nathan Douse ,Financial Planning Consultant or call 01772 821021.
Authorised and regulated by The Financial Conduct Authority and details of our registration can be viewed at https://register.fca.org.uk/ under reference number 448716.