What the Covid-19 crisis has shown is that our world can quickly turn upside down. No one likes to think that something bad will happen to them, but if you can’t work due to a serious illness, how would you manage financially? You might think this may not happen to you, but it’s important to recognise that no one is immune to the risk of illness and accidents. No one can guarantee that they will not be the victim of an unfortunate accident or be diagnosed with a serious illness.
Generally speaking, if you were to become ill and not able to work, your employer would not pay you in full while you are off work. You would probably get the statutory sick pay entitlement which is currently a mere £95.85 per week once you have been off work for 4 or more days consecutively, up to 28 weeks. But that amount won’t go very far in comparison to your usual earnings. If you have a mortgage, or significant outgoings or dependents, then income protection is a must have. Otherwise your home can be at risk if you do not have appropriate protection.
If you’re sick or injured, Income Protection will enable you to pay your bills and provide for you and your loved ones. You can choose a policy built around your own circumstances and you can cover as much of your income as possible or just protect your mortgage or rent repayments. It’s up to you how long your plan stays in place and how long each claim pays out for.
According to the ABI (Association of British Insurers) one million workers a year find themselves unable to work due to a serious injury or illness. Income Protection is there to pay out in case something happens to you and you’re unable to work. It’ll usually provide between 50% and 70% of your salary until 1 of 3 things happen; you recover and go back to work, you reach state pension age and retire, or you pass away during the period of the claim.
Covid-19 has been a real wake-up call for the whole country about the importance of a good financial back-up plan and the value of financial advice. If you’re looking at taking out Income Protection then you can seek advice from an independent financial adviser or specialist broker.