Ensuring you have a financial safety net forms part of making sure you have the financial resilience to weather a storm. Whether you have a rainy-day fund, enough money to cover a couple of months’ bills should you find yourself unemployed, or to cover the cost of an unexpected repair bill, having monetary security in place can provide a welcome relief.
Insurance can also play an important part in making sure you are financially secure, particularly when covering your income through illness. Whilst some employers may pay more, they are only obliged to pay Statutory Sick Pay, which is currently £96.35 per week for up to 28 weeks. Once this period has elapsed, if you are still not able to work you would have to apply for Universal Credit, which is currently £344 per month for any single claimants under the age of 25. For many, this is unlikely to cover a mortgage, rent, essential bills and food for an entire month. Therefore, having an insurance in place, such as income protection, could be a sensible investment.
Income protection pays you a percentage of your salary each month if you aren’t able to work due to illness or injury. Any plan you purchase can also take into account if you receive sick pay from your employer to make sure that the premium you’re paying is only for what you need. The circumstances you would be covered for will vary depending on your insurer so it’s best to discuss this to make sure you are insured comprehensively. Typically, payments will begin following a deferral period, but this can also be adjusted to take into account any sickness payments from your employer.
In the event of needing to make a claim, you will need to be signed off sick by your GP and provide medical evidence to your insurer to support your claim. Your policy wording will explain the details of what evidence you will need to supply. On your return to work the payments from your income protection insurance will stop, but it is wise to keep the policy active so that it would cover any future periods of ill health.
Other types of insurance to consider.
Income protection insurance is just one of many health insurance policies which can provide you with financial security. Critical illness cover will pay out a tax-free sum if you are diagnosed with a serious illness, as defined on your policy, which can then provide the financial support to enable you to focus fully on treatment and recovery. Private medical insurance also provides ongoing support for your health by enabling you to access private medical treatment, rather than the NHS.
