Income protection

Recently, sick pay has been highlighted for those that are unable to work due to COVID-19 but it’s not a new problem. According to the HSE, in 2018/19 23.5million working days were lost due to ill health.

Serious ill health is likely to affect 1 in 4 women and 1 in 5 men before retirement 1 .

Statutory Sick Pay is just £415.35 per month and only payable for 28 weeks, thereafter you may be entitled to Employment & Support Allowance (ESA) which could be £113.55 per week.

Could you pay your bills on £113.55 per week?

Income Protection could provide a solution to individuals, it will pay an agreed benefit after a deferred period. The deferred period is the time between making a claim and the benefit commencing and can be between 1 week and 52 weeks. The longer the deferred period then the lower the premium.

Self-employed and employed individuals can apply for a policy and it could cover up to 60% of your earned income. The benefit is generally payable for the period you are unable to work or reach the policy end date. Plans should be established on an “own Occupation” basis, i.e. if you are unable to follow your occupation rather than “any” occupation.

Some plans will pay for a shorter period, usually around 2 years in order to reduce the premium.

Plans can be structured so that they match any sick benefits you might receive from an employer.

We always think about life cover or critical illness cover, but these will generally provide a lump sum.

Christian Hartnell

Consultant