The protection policy every working adult in the UK should consider is the one most of us don't have - income protection.
People will insure their house, car, and their possessions, yet they rarely seem to realise they could lose them all - whether they are insured or not - if they lose their income.
Many people think they could rely on money from their employer, their family or the state if they couldn’t work because of a serious illness. But recovering from an illness can take a long time. How long would this money last?
With hospital waiting lists at a record high of 7.7 million, those waiting for routine operations also face the real possibility of having to give up work before they get a date for surgery.
Following the pandemic, research by the Bank of England has shown that savings have increased as families have cut down on unnecessary expenditure. These however have mostly been used up with the current cost of living increases.
A recent study from The Exeter Insurance Company highlights that savings rates differ significantly throughout the different age groups. As younger people struggle to get on the property ladder and continue to live with parents their ability to save is considerably higher than the homeowning middle aged counterparts with higher energy and food costs alongside a rising concern over falling earnings.
As many as 43% of their study respondents who already had income protection policies stated that they had cancelled them in the previous year stating affordability and a perceived lack of value their policies could offer in the current climate. So what’s the alternative if you don’t have an income protection policy?
State benefits - could you and your family survive on just £109.40 a week?
Sick pay from your employer could help if you have an occupational scheme but these will be limited to a number of weeks before your employer drops to the state Statutory Sick Pay (SSP). SSP at the moment is £109.40 and is paid by your employer for up to 28 weeks.
After this, the option is to move to Universal Credit with an additional claim for Employment and Support Allowance, but is this enough?
60% of people would not be able to support themselves financially if they were unable to work for over a year. Each year over 300,000 people fall out of work onto health-related state benefits.
The average length of an incapacity claim is 8 years, so for most people who are unable to work due to an accident or sickness, paying the mortgage and living costs becomes a real struggle.
A useful exercise is to compare how much your monthly outgoings are to how much the state would give you. You might find there is quite a shortfall. How would you bridge the gap?
Is it time you thought about buying an income protection plan?
What is income protection insurance?
There are several different types of cover available, and it is important to understand the difference between them in order to find the right policy to suit your needs.
Income Protection insurance is, in effect, health insurance paid by monthly payment. This will usually provide a regular income if you are unable to work due to illness or disability until you are well enough to return to work in the short or long term, or until the end of the policy term.
The process can be quite complex, so most providers do not offer an online comparison service. However, we have a team of expert advisers who can help. The service is free, impartial, and compares the whole of the market to provide you with the ideal cover and the all important peace of mind.
If you would like to discuss your income protection needs please contact Vicky, Caroline or Lyn on 01229 811811 or contact us via email.