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  • Writer's pictureGregory Deer

Get ill and can't work - now what?

Imagine if you were ill and couldn’t work – not just for a week but for a long time.

Pretty bleak but it happens.

More people are feeling the effects of modern working life and its negative impact on mental health, it’s well known 1 in 2 of us will have the big C at some point, and there’s a load of other things that could lead to some time on the side-lines.

How would your finances fair if you had no income? Not great I’d imagine. Especially if your biggest asset is your potential future earnings (like most millennials).

Thankfully, there is an insurance product called ‘income protection’. Income protection works by paying you an income after a specified ‘deferred’ period that you have been off work due to ill health. Payments only cover up to 65-75% of your salary and can continue from a couple of years or up until retirement age depending on the policy.

It’s not as rewarding as working but it should provide enough to help you get by and it’s a whole lot better than having absolutely nothing to fall back on.

Around 17% have income protection according to a survey by ‘The Exeter’ of 4,000 working UK adults in 2022.

Employed. Some employers have group income protection schemes that employees automatically become a part of. You usually don’t have to contribute to the premiums and they are not classed as a taxable benefit. Benefit payments are paid via PAYE and are taxable. If your employer doesn’t offer income protection (sometimes known as permanent health insurance (PHI)), or the payments only last a short time period and you need more protection, look into getting a personal policy as well.

ACTION – check your employer’s policy.

Self employed. As with most things; you’re on your own. You can take out a personal income protection policy. It would also be worth holding a slightly larger cash buffer (see previous post ‘how much cash should you hold?') to allow for sick pay as there’s no employer to bail you out as the government does not offer sick pay for the self-employed.

Apart from the actual benefit payments from income protection, you could also receive specialist care to help you return to work. Those insurance companies won’t want you off work for longer than they have to pay you!

Want to know more? Don’t understand your income protection situation? We’re happy to help. As part of the MUVADO 100 day plan we look at all your protection needs and objectives to provide a suitable protection solutions for you.

We’re independent so can review the whole of the market to find the best providers to meet your needs at the lowest possible monthly premium. Get in contact today

Income Protection policies typically have no cash in value at any time and cover will cease at the end of term. If premiums stop, then cover will lapse. The payment of any benefits may affect any claim to means tested state benefits. Not all illnesses are included.


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