MONEY WATCH FINANCE
HOW IMPORTANT IS YOUR INCOME LONG TERM INCOME PROTECTION
Providing a Continuing Salary When You Are Unable To work
Most people will think of insuring themselves when they take out a mortgage. Considering policies such as life assurance, critical illness or serious illness cover. However, what happens in the event of an illness or an accident. It does not matter if you have a mortgage, if you are renting or living at home with family, if you cannot work, you cannot earn. So, ask yourself what the implications to my finances are should I suffer an illness or accident that means my income will stop. Can I continue to pay the mortgage, rent, put food on the table, pay utility bills and provide other life expenditure.
SOME ALARMING STATISTICS
Only 7% of the UK adults own an income protection policy, 30% have no back up plan if they were taken ill, 41% expect to rely upon statutory sick pay which is currently £94.25 per week.
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The Need for Income Protection? It is a sad fact of life; your outgoings would not stop if your income did. Long term income protection provides cover for almost all occupations, whether employed or self- employed. It is designed to pay you a regular benefit (income) if you are totally unable to work as a result of being ill or injured. You can choose your policy to finish anywhere between the ages of 50 and 70 years. The income you receive from an income protection policy is tax free.
Some employees are fortunate to have a sick pay scheme with their employer. If you are self-employed this is obviously not the case, so income protection is exceptionally important to provide an immediate income when needed.
However even if you are employed and you have the benefit of an employer sick pay scheme, what happens when the
benefit ceases. For example, some of the best employer sick pay schemes are provided by the NHS and local government. Their schemes provide a continuing full salary for 6 months and a further 6 months’ salary at half pay. In this scenario the employee has a continuing income for the initial 12 months of incapacity. However, after 12 months if the illness or injury still prevents a return to work, what will happen. The answer is quite simple, the income stops. You have no further income to continue your life expenditure such as mortgage, rent, utility bills, food, car expenses etc. In the most severe cases of illness or injury, a return to work may not even be a possibility.
By law, your employers must pay your statutory sick pay for up to 28 weeks (el- igibility criteria apply). After that, you may have to depend on state benefits.
It is a good idea to check what benefits your employer provides if you cannot work due to illness or injury. They should be in your contract, or you can ask your HR department.
Income protection pays out on any physical or mental illness and any injury that prevents you from doing your job. So, unlike a critical illness policy, the cover it is not restricted to a defined list
of illnesses.
Income protection comes with lots of options, so it is best to talk to a qualified financial adviser. They can build you a plan that is right for you and your family to ensure lifestyle and finances are protected.
It is always important to obtain advice from a qualified Financial Adviser. They can find the most suitable type of policy and the correct level of cover for you and the family.
For further information please contact Peter Hunt on: 0121 503 0961
www.moneywatchfinance.com
LIVE24-SEVEN.COM
THE MIDLANDS PROPERT Y GUIDE MONE YWATCH F INANCE
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