Who needs to protect their income?

Posted by & filed under Children's Critical Illness, Critical Illness, Finance, Protection Insurance.

I’ve been inspired to write this following a couple of conversations that I’ve had in the last few days … “Who needs to protect their income?” – Everyone!

It sounds like a cliche to say it, because it is, but you wouldn’t think about building a house without a decent foundation. That’s the way I think you need to look at income, as the foundation for everything else you do with your life .. If you’re unable to work for a period of time for whatever reason, and have no income, your life is going to fall over!

This week I have spoken (independently) to two young mums who have chosen to spend the next few years predominantly concentrating on raising their children. The ladies both therefore decided that they wouldn’t need their income protection policies anymore, because there is no income to protect which is incorrect .. Please STOP! Now think about:

  • If anything were to happen to you, how would you care for your home and family?
  • Would your partner need to reduce working hours, and therefore income?
  • The answer might be to arrange child care, which we all know is costly. How would you afford it?
  • Would you need, or appreciate, additional care whilst you recuperate? How can that be paid for?

Those ladies may not receive a pay slip each week or month, but they definitely have a job. If they are unable to do that job for a period of time, then there are potentially huge cost implications.

There are some people that find reassurance in the idea that if unable to work, they will receive state benefits. The current level of statutory sick pay, if you’re entitled to claim, is £85.85 for up to 28 weeks.(http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/Illorinjured/DG_10018786)

I know that I couldn’t survive and pay my bills with that, could you?

You may be lucky enough to receive some benefits from your employers. Some of the generous schemes may pay up to 6 months full pay, followed by 6 months at 50% pay … Fantastic! That’s better than nothing, but it’s not good enough. The good news is that your adviser should be able to arrange cover that will ‘dovetail’ with the existing, and that will help ro reduce premiums.

There are huge amounts of statistics around about sickness, and the reasons why many people are away from work for sustained period of time. With very little effort, and a small amount of ‘internet time’ I’m sure that your favourite search could feed enough numbers to satisfy any appetite, but that’s not what I want to do here. I will share 3 that recently struck me (Credit action, 2011)

  • 15 million Britons could not survive until the weekend on savings
  • 40% of Brits are not currently saving – of these 2/5 have never saved at all
  • 36% of the population do not believe that they have enough money to cope with an emergency

Most people can’t afford NOT to have some form of protection in place. With good advice it’s easy to see that the risk of having no cover is just not worth taking … If you don’t have cover, then you really should address this. If you’ve had a policy for a while, it might be worth speaking with your advisor to check that the amount of cover, and the provider / product, are still best suited to your needs.


Article was originally posted elsewhere (movingex.blog.co.uk @ 2012-05-18– 14:24:36) Content remains relevant, which is why I have added it here. Tips based on observations made both whilst working inside estate agency offices, assisting clients to purchase, and of course purchasing properties myself.