Many of us insure our phones, pets, cars and holidays but forget to insure ourselves against accidents and sickness. For most, work place sickness benefits are fairly limited if any are provided at all. According to a study carried out by the money advice service, more than 16 million people in the UK have less than £100 in savings. This means that for most, they have nowhere near enough savings in place to cover household bills in the event of any accident or sickness. Unless you have parents to fall back on or a wealthy spouse, then you are likely to fall into financial difficulty if you were unable to work.
Additionally, your mortgage has been secured by your income, if your income were to be affected by you may not be able to afford your mortgage. It’s imperative to protect the source that allowed you to obtain your mortgage in the first place!
We ask that you ask yourself the following questions:
- How much are your household bills each month?
- Could you pay your bills if you did not have an income?
- How long could you survive on statutory sick pay?
- How much sick pay does you employer offer and what will you do when this stop’s?
- Do you have sufficient savings in place to cover your income in the event that you were unable to work?
What is Income Protection?
Income protection is designed to provide an income should you not be able to work due to accident or illness. Unless you have sufficient savings in place or family to help, you are likely to struggle affording your household bills should you not be able to work; even for a short while. Income protection providers generally pay out up to 60% of your income as a monthly benefit in the event that you were unable to work due to accident or illness. The pay-out will continue right up to when you return to work (or for a set period of time) without leaving you short and allowing you to focus on getting better rather than worry about how you might pay your bills.
If self-employed: Being self-employed means that you have no company sick pay and that your entitlement would be limited to statutory benefits in the event of sickness. If eligible, the current standard weekly rate for Statutory sick pay is £95.85 per week and only up to 28 weeks, this is far lower than most incomes and would not cover standard outgoings in the event of accident or sickness.
For Employed when sick pay ends: Most company sick pay will out pay out for a short amount of time, after which you may be entitled to statutory sick pay up to 28 weeks. The current standard weekly rate for Statutory sick pay is £95.85 per week, as above, this is far lower than most incomes and would not cover standard outgoings in the event of accident or sickness.In order to ensure that income protection is affordable for everyone, there are 2 years, 5 years and full term plans which are payable until retirement (most often age 70). The 2 and 5 year plans are lower in cost as they pay out for a shorter period of time.
Even if you are self- employed without any proof of income, in your first year as a sole trader, there’s an income protection plan for you!
No doubt will you have arranged suitable life cover to ensure your mortgage is repaid in the event of your death, so why not take out a policy that may benefit you whilst living?
Everystep Financial are fully qualified, whole of market brokers, with a wealth of knowledge and experience in all types of insurance. We are available to visit you at a time convenient to you, in the comfort of your own home or undertake a remote review. We have offices in Weston-super-Mare and Hanham in Bristol.
If you would like to review your income protection options, please get in touch for a quote!