Revealing statistics show that only 9% of the British public have income protection (IP), in comparison to 41% who have life insurance, despite the clear issues it would cause for most people if they lost their income.
Independent Financial Advisor and Partner Scott Herbert from Clarke Nicklin Financial Planning clarifies a few of the myths surrounding IP and the importance of having it.
He comments ‘Each year there has been an increase on claims being administered’
The Association of British Insurers and Group Risk Development have reported that a record £13.9m a day was paid out in 2017 from protection policies such as critical illness, income protection and life insurance.
Scott adds ‘Long term illness is age irrelevant and can strike whenever – 29% of the claims made to Aviva last year were by policy users under the age of 40. Many of us have no financial back up plan as statuary sick pay (SSP) is just £92.05 per week, paid up to 28 weeks. Income protection is vital in the support it provides by removing the worry of financial burden, and it’s not as costly as you may think.’
A forty-year-old non-smoker on £28k (just over the National average wage) could pay from approximately £15pm to provide an annual income of £16,800 for two years*. A long-term policy that could provide an income up to retirement would be approximately £38.00pm.
Dependents who rely on your salary, not only is it wise to have a policy in place but to have a policy that gives you the correct cover. There are a variety of policies available to suit you, ranging from those which purely pay off debts to providing an ongoing income.
In determining what plan would be best for you, your full circumstances, including any savings you have plus any company sick pay policy and SSP entitlement, would be part of the assessment made.
As Independent Financial Advisors and experts in the field, Clarke Nicklin Financial Planning will assess the most appropriate policy and type of cover for your needs by getting to know in detail you and your circumstances, and will offer best advice on choices available as well as finding the best rates available for the protection you need.
* The benefits are taxable under current tax rules. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs’ practice. Levels and bases of tax relief are subject to change.