Our overreliance on the state to provide financial support has never been in the spotlight as much as it has in recent times. Unfortunately, whilst furlough payments and the uplift in universal credit have ended, the financial challenges faced by many UK families will continue.
Income Protection is not the answer to the monetary challenges created by the pandemic. It does, however, have an important role to play in giving UK families greater financial resilience. It is key in providing a financial “Plan B” should our incomes be impacted by unforeseen events such as ill-health or injury. Because of this, Income Protection should be a greater priority for us all.
Income replacement?
The financial support provided by the government during the pandemic was generous. At its height, the furlough scheme replaced up to 80% of an individual’s income1, but in its absence, we must remember that such support is not always as generous.
So, what are your options if you are unable to work due to illness or injury?
Those with employer sick pay schemes may have the benefit of a higher proportion of salary being paid for a period, but what happens longer-term when the amount paid reduces? How would they cope with a reduced monthly income?
If you have no access to employer sick pay, how would you manage on Statutory Sick Pay of £96.35 per week2 or Universal Credit which starts at just £257.33 per month3 depending on an individual’s circumstances?
Income Protection policies may not be free, but at an average cost of £32 per month4, surely that’s money well spent. For those with tighter budgets or wanting to cover essential outgoings such as rent or mortgage payments, there is a range of policies to suit all needs.
Income Protection is specifically designed to assist a policyholder in the event they cannot perform their job, due to illness or injury. Income protection will not cover you in the event of employment termination or if you are made redundant.
The Future?
Research from The Exeter this year found that 67% of working adults were concerned about a loss of earnings because of illness or injury5. Whilst this may be front of mind for more UK workers, being aware of something, and actually taking action about it are two completely different things.
We offer no apologies if we sound like a broken record by continuing to talk about the importance of Income Protection. Why? Because we firmly believe, that now more than ever, the need for Income Protection is greater than it’s ever been.
Please speak to us about the options available, tailored made to suit your personal circumstances. Please email carol@grosvenor-insurance.com or phone 01244 324891.
References
1 – www.gov.uk
2 – https://www.gov.uk/statutory-sick-pay
3 – https://www.gov.uk/universal-credit/what-youll-get
4 – Swiss Re Term and Health Watch 2021