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Income Protection

There’s no way that can happen…is there?

In May 2016, Leicester defied odds of 5000/1 to lift football’s Premiership trophy.

In June 2016, the UK voted in a referendum, and defied odds of 7/1 to decide to exit the European Union.

Earlier this month, the United States election concluded that against odds of 9/2, Donald Trump should be the next President.

Perhaps we shouldn’t be surprised when things happen we’re not expecting…so why is it that this seems to differ when it comes to insurance? Most people are happy to insure their cars, their homes, and the things they have in them such as TVs, laptops, etc. They’ll also happily insure their pets. But they often forget to insure the thing that pays for everything — which is their income.

According to the Association of British Insurers (ABI), each year one million workers find themselves unable to work due to a serious illness or injury. It doesn’t matter whether or not you have children or other dependents – if illness would mean you couldn’t pay the bills, you should consider income protection.

If you’re still in any doubt as to whether this is applicable to you, let’s walk through the possible outcomes…  

Scenario:  You earn the average UK wage of £27,000 (approx. £1,700 net per month), and your monthly household bills are £1,000.  You’ve unfortunately found yourself unable to go into work because of illness of injury – for the purpose of this example, let’s say you’re off work for a year (although the average Income Protection claim is more like 6 years!).

Possible Outcomes:

(1) You have full sick pay for 12 months and therefore no financial loss – fantastic! Thank you very much employer!

(2) Your employer gives you 6 months full sick pay – you now need to find £1,000  per month, for 6 months (£6,000).  Where does this come from? Savings…family support…the state?

(3) Your employer gives you 1 month sick pay – you’re now in the situation of having to find £1,000 for 11 months (£11,000).  Where does this come from? Savings…family…the state?

(4) You have no sick pay via your employer – your income has ceased and you now need to find £12,000 just to pay the bills each month.  Where does this come from?

It may surprise you that in the event of long term sickness, the state could offer you Statutory Sick pay, but only to the value of £88.45 per week – could you survive on this?  Using the example above, the answer is simple…no, you couldn’t.

Thousands of workers don’t know what their sick pay entitlement is with their employer.  It’s important you know this, so we have a template you can copy and paste into an email to your HR department so you know exactly what you’ll get. Visit:  www.vita.co.uk/personal/income-protection and look just beneath the ‘Cause of Claims’ chart.

Setting up an Income Protection policy can take away any uncertainty you may have about how you would cope in the event of longer term sickness or injury.

Contact us today on 0800 988 3637 for a free, no obligation quotation.  You can also request a call back via our website: www.vita.co.uk/contact

 

Paul Reed – Protection Specialist and Co-founder of Vita – an independent, national award winning, insurance brokerage in Cardiff. 

Photo Credit: Business Insider