Everyone’s future is unknown and we think it is important to consider the risks if things don’t go to plan. Could your family cope without your income?
Securing your financial future is essential and will make you think about what is important to you – your family, your lifestyle and your home. Are they protected?
To work out whether you need protection and what type of protection you might need is what we at Resolve Financial Solutions offer as a service. If, for example, you are worried about whether your family could cope without your income, then we need to assess the risks.
We speak with our clients and discuss budget planning in great depth. During this discussion, we gain an understanding of the couple’s outgoings and also their net incomes. We would then workout if there is going to be a shortfall in that income and how much this would be. We know that when times are tough financially, there is usually a fall in expenditure so this is taken into account.
We would then discuss with our clients what (if any) sick pay they would receive from their employer. Only a minority of employers support their staff for more than a year, if they’re off sick from work. Given the low level of state benefits available, everyone of working age should consider a plan to provide an income.
Income protection pay-outs are usually based on a percentage of your earnings: 50% to 70% is the norm. For example, if you earn £40,000 a year, take out an Income Protection policy designed to pay out 60% of your salary. Your policy will pay out £40,000 x 60% = £24,000 a year. The good news is that payments from Income Protection policies are made free of income tax. Please bear in mind that the payment of any benefits may affect any claim to means tested state benefits. Your benefits may be reduced if you receive other regular income, such as sick pay benefits. Normally, we would suggest a deferment period to consider any benefits you may receive.
If the client was unable to bring in an income due to a critical illness then we would look into finding protection in the form of a lump sum to cover the lack of income. This would come in the form of critical illness cover. The last thing you need them to worry about is how to cope without your income.
Critical Illness Cover is normally a long-term insurance cover that pays out either a lump sum or a regular annual income if you are diagnosed with a critical or serious illness that is covered by the plan you have in place. You may use a policy to pay off all or part of a mortgage or cover other costs relating to your condition.
If you are concerned about whether your family would be able to cope without your income, then please get in touch and we can carry out a budget planning meeting and investigate the options available to you.
Please note: The plans described 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. Payment may not be made where an illness is excluded from the policy.