Why protecting your income is more important than ever

With Joe Carey, Independent Financial Adviser

After spending a fortnight in ‘self-isolation’ with my wife and new born daughter in our own little bubble (on paternity leave), my first day back at work was Monday 16th March, where I was greeted by the biggest peace-time crisis in living memory.

When we hear COVID-19 we question our own health, and that of our loved ones.  Since the crisis began in China at the turn of the year and it became clear that it was spreading quickly around the world, we saw a significant spike in Protection enquires, and in particular Income Protection.  I therefore thought I would highlight what this means as it is often overlooked by many.

What is Income Protection?

Income protection is a long-term insurance policy designed to help you if you cannot work due to illness or injury.  It ensures you continue to receive a regular income until you retire, or you are able to return to work.  The protection replaces usually between 50% and 70% of your income if you cannot work due to illness or a disability.

The protection covers you (and pays out) until you are well enough to work again, or until you retire, pass away or when the policy term ends; whatever comes first.  This differs significantly from the likes of Accident, Sickness and Unemployment cover (or even the much denounced PPI) which only used to pay out for circa 12/24 months.

Income protection covers most illnesses that leave you unable to work; either short or long term (depending on the type of policy and its definition of incapacity) and you can claim as many times as you need to, while the policy lasts.

Why is Income Protection important?

Most employers will offer sick pay, but it is often only paid for a few weeks.

State benefits are surprisingly low for people who are unable to work due to illness.   Statutory Sick Pay (SSP) is £94.25 per week and the Office of National Statistics (ONS) says the average household spends £529 per week (you do the Maths!).

According to the Association of British Insurers (ABI) one million workers a year in the UK find themselves unable to work due to a serious illness or injury.  If this was you, could you live on Statutory Sick Pay of just £94.25 per week?

Income protection (and therefore peace of mind for you and your family) may cost less than you think, and with the expertise of a Chartered Firm, you know that the advice you are getting is crystal clear.

If this was an area in which you would like to chat further, please do not hesitate to call me, or your Active financial adviser

We are still here if you need us and will be regularly updating our website so we urge you to follow our social media channels to help us all stay touch on Twitter, Facebook OR LinkedIn



Get in Touch

If you would like to find out more about how we can help you, please give us a call or drop us an email.

Phone Us Email Us
Keep up to date

Sign up to our newsletter to keep up with all things Active.

Active Spirit

“Having been a client of Active for many many years and have always been given great advice and direction. I am now looked after by Andrew. He has given excellent advice and service, continuing on the great work this company has always offered me. Always cheerful and helpful; a great asset to Active. I have no problem recommending him to other people.

Are you a Trustee? You must register your trust by 1st September 2022

15th August 2022

Important changes mean that all trusts must be registered with HM Revenue and Customs (HMRC) via their Trust Registration Service by Thursday 1st September 2022. The Trust Registration Service, or TRS…

The Active ladies raise over £1000 for charity!

25th July 2022

They did it! The Active ladies walked 'in to the light' for The Teesside Charity and raised £1050 in the process! Beginning the long walk just after midnight on Sunday…

The Active Ingredients: Liza Pontone

25th July 2022

Welcome to the latest edition of ‘Active Ingredients’ when each quarter we invite a member of our team to tell us a little about themselves; what brought them to Active,…