Income protection could be crucial for your family and lifestyle (Birmingham Post Article 01.11.2018)

Have you ever thought how you would make ends meet if you had a serious accident or illness?

There’s your mortgage or your rent to pay, the weekly groceries, utility bills and general everyday living expenses.

Not only do you have the stress of getting your health back on track, but could you cope with no monthly income to cover your outgoings?

People take out insurance to cover their pets, mobile phone, home appliances, car breakdown … but what about your income? Income protection cover will help you deal with life’s misfortunes and provide peace of mind.

Yet only a very minor percentage of the workforce takes the necessary steps.

According to the Money Advice Service, each year one million people in the UK find themselves unable to work due to a serious illness or injury.

Some employers offer the opportunity to be included in a company scheme but if this is not an option, individual policies are available.

Statutory sick pay in the UK stands at just £92.05 a week for up to 28 weeks. Would this really be enough to maintain your monthly commitments?

There are two main types of income protection – short-term, sometimes known as accident, sickness and unemployment (ASU) policies, which tends to only pay out for one or two years, and long-term, which provides a regular income if you are unable to work due to illness or disability, lasting until you are well enough to return to work, retire, die, or the end of the policy’s term is reached, whichever is the sooner.

Policies are designed to protect a percentage of your gross salary taking into account the state benefit you would receive.

There is often a wait before a claim payment starts – this is called a deferred period. Generally it is set up to begin after your sick pay ends or after any other insurance stops covering you.

The cost of income protection cover can vary, depending on your age, occupation, required benefit, deferred period, payment period, your general state of health and in particular whether you smoke or not.

You may not need income protection if you have sufficient funds available to supplement your state benefit, which can include taking your pension benefits early, having support from your partner or family or an alternative method of income for example via savings. However depending on how long you have until retirement age this is definitely something that should be addressed especially for the generation with a mortgage and young family.

The younger you are, and before any health issues arise as you get older, the premium is usually cheaper.

Long term sickness can be down to the likes of stress, mental health, musculoskeletal injuries or cancer. Manual workers are particularly prone to musculoskeletal injuries, stress is more common for non-manual workers, and cancer can affect anyone.

People gamble that nothing will ever happen to them so they don’t need the cover.

But anything can happen to anyone of any age or any occupation at any time.

What I would say is this – look around your family, colleagues and friends, social media even, how many people do you hear of who might find themselves in a position where their income suddenly stops? This could be you tomorrow, next week or next month.

A lot of focus is put on regular savings, pensions and investments, which are still important. But protecting income in times of hardship, specifically through injury or illness, is potentially even more vital.

So spare a thought – do you need this cover?

Or put it another way – dare you risk doing without it?