Income Protection

With the current economic climate now is a good time to review your financial arrangements and one such question you should be asking is ‘If I am off work for any period of time due to sickness or accident how would I cope financially?’

Statutory Sick Pay (SSP) is the minimum amount that an employer has to pay an employee if they are off work due to sickness, disability, industrial injury etc.

Statutory Sick Pay is currently paid at less than £100 per week for up to 28 weeks, although the first 3 days of sickness are not paid as these are known as ‘waiting days’. A period of incapacity for work is any period of sickness lasting 4 or more days.

With this figure in mind would you be able to pay your mortgage, insurances, living costs etc if you were off work for any length of time due to sickness/disability.

Long-term illness is something we prefer not to think about but official figures show that every year more than 670,000 men aged between 40 and 64 are absent from work for more than six months because of it.
Many people suffer financial hardship as a result and the state offers only minimal help. Eligibility for incapacity benefit is strict. After 28 weeks of illness claimants must undergo a test checking their ability to carry out a range of work-related activities such as walking, sitting and using stairs. Even if they qualify, benefits are not generous and they are taxable.

Permanent Health Insurance (PHI) may be the answer. Permanent Health insurance will pay you a replacement income if you cannot work through illness or accident and can give peace of mind. It pays a regular income designed to protect your standard of living if you suffer long-term sickness or injury. Benefit usually starts after an initial waiting period of 4, 13, 26 or 52 weeks and it is payable until you return to work, die or the policy term expires, whichever happens first. It will secure your income for you until retirement rather than relying on state benefits. It is called permanent because the insurer may not cancel the policy no matter how often you claim the benefit.

PHI policies can be written on a term or a Whole of Life basis.

The information on this site is for general guidance only. Foyle Financial is an appointed representative of the M & E Network Limited, which is authorised and regulated by the Financial Services Authority. The M&E Network is entered on the FSA register (www.fsa.gov.uk/register/) under reference 150643.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK