You’ve suddenly fallen ill or injured yourself. You can no longer work. Can you afford NOT to be covered?
It’s almost illogical when you think about it; and it certainly doesn’t compute, yet the fact remains that a significant percentage of us don’t spare a single thought on the (simplistic and hassle-free) measures we could take to safeguard our income stream in the event of something unexpected happening in our lives which would throw the biggest of spanners in our financial works.
Yes, we’re talking about income protection insurance; and more pertinently the distinct lack of paperwork pertaining to a dedicated policy amongst many of our household files.
It’s all very well insuring our homes (and its often garish contents), cars, travel plans, best furry friends and naturally enough, our health and wellbeing, yet if you stop for one moment and think about it, just what (chiefly one thing) affords us the monetary opportunity to lavish this in the first instance? Yep, our salaries. Or any other regular income stream we rely upon for pretty much everything in our life and times. What if THAT suddenly dried up and ceased to exist for an undefined period? Then what? The words ‘creek’ and ‘paddle’ rapidly spring to mind.
But it needn’t be like this. Not if you planned ahead that is. The worrying thing is that nearly 25% of UK workers with savings of their own admit to having massive reservations when it comes to being in a position to fend for themselves longer than a couple of months, should they find themselves unable to work for reasons of serious injury or illness.
Yet despite this statistic, less than 5% do anything to safeguard this potential eventuality whilst they are relatively comfortably well off (and carefree) working.
The ‘anything’ in question at this time of asking being arranging a decent and far-reaching income protection insurance policy. Once that revelation sinks in it’s perhaps not that a shocking admission, given that we typically focus most of our attentions on the short-term, rather than planning ahead, especially when personal finances come into the equation.
Time and time again we tend to concentrate our efforts on the more immediate concerns as opposed to those which may or may not arise sometime down the line.
In addition to this almost blissful ignorance (and society-inclined ‘living for the moment’ mantra) on many of our parts, you can also factor in not being in receipt of all the facts as another reason in the less than impressive uptake of income protection insurance plans.
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On which note, some folk are led to believe that their existing employer/company sick pay will come to their rescue the moment they sustain or suffer anything out of the ordinary which incapacitates them for a largely unknown passage of time.
Yet think again, as this is only ever a very short-term solution which covers employees for a very limited time. And bear in mind that 1 in 20 of us have been off work for in excess of 12 months at some point or another, so are highly unlikely to still be in receipt of statutory sick pay at that juncture. A fact brought into even sharper focus on learning that only 14% of people receive sick pay after 6 months, with an ever less welcome concession that a figure bordering on 24% of us stand to receive ZERO sick pay, depending on circumstances/contractual agreements/etc…
After ruling out any sort of enduring reliance on savings and/or employer sick pay, don’t count your state benefit chickens either, as some misguided people often do in their hour of need. Because firstly your personal predicament might not even qualify you (say for instance if you have savings above a certain threshold), whilst if and when you receive a hand-out the actual amount will not stretch to cover all of your outgoings, you can be sure.
Consider what percentage of your wage normally goes toward mortgage payments, car finance, utility bills, credit cards, store cards, holidays, schooling, etc each month and you’ll concur that unless you’re a high roller (or a Premier League footballer) your outgoings won’t be met/compensated for by any state benefits you may be eligible to claim.
If and when you’re unfortunately laid up with an unpredicted injury, or alternatively side-lined from work for an indefinite period due to a serious illness being diagnosed, then one (major) less worry would be just how you (or your family/dependents) are going to continue to meet household expenditure.
Which is exactly where income protection insurance policies come to your financial aid; leaving you the time to gather your thoughts and apply them to your recovery process.
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More than being just a sensible option to consider, arranging an all-enveloping income protection insurance plan is a must, and essentially THE most important insurance package you could ever sign-up to. And one of the best bits is, it’s nowhere near as expensive as you might have otherwise thought. Again, this misconception might well be the reason that so few people secure an income protection policy, wrongly assuming that they’re a fiscal luxury they can ill afford. Conversely if you are ill for any extended length of time, you’ll be glad you did afford putting a contingency plan in place.
Thankfully there are a range of products on the market offering various levels of cover and can be taken out over various periods of time and what’s more, most pay-out up to two-thirds of your gross income. Or in percentage terms, usually anywhere between 50% – 70% of these pre-taxed earnings. And speaking of tax, this money will be awarded in a tax-free guise if and when applicable.
You can delay when the income protection insurance provider starts to recompense you too, which not only saves you money on your premium quotes (the longer these period is adjusted to) but also can be triggered to kick-in once your savings (or any state benefits or statutory sick pay) runs out. Bearing all this in mind there really is no excuse to potentially leave yourself (and your family) out of pocket should you fall victim to an injury or illness in the future, if you start playing more of a long game and protect your income; and therein everything else which it’s responsible for giving you access to in life per se.
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