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Protecting your income for an unexpected future


The COVID-19 pandemic had significant repercussions not just in terms of health. Few people have been immune to its impacts, whether employed or self-employed with businesses, many are likely to have been affected by the pandemic.

For the vast majority of people, who were initially or have continued to be affected more recently by reduced wages as businesses were forced to shut, this has meant reduced spending to ensure that all the bills continued to be paid. For others, in more fortunate positions, it has meant the chance to save more as we have not been going out while the UK remained shut.

As we move out of restrictions think of a time in the future if you were off sick. How would you be able to cope financially now that the government support is being removed and there is no furlough pay and less support from mortgage lenders? You may think this will not happen to you but the Department of Health and Social Care’s study of Health in the Workplace, in July 2019, stated that 1 in 25 people in the UK are unable to work due to serious illness or injury.

If you are off work due to an accident or sickness, the first option may be help from your employer (if you are employed). However, whilst some employers offer full pay for periods of 6 months or longer, the reality for many is no employer help at all and your only entitlement is Statutory Sick Pay (SSP). This is currently £96.35 per week compared to the average UK wage in 2019 of £511 per week. Imagine, having to survive on less than 19% of your wage on SSP.

You might think about using your savings. For those who have had the chance to save, the Money Advice Service recommends having the equivalent of 3 months' wages in savings as a minimum.

The next stage is to start thinking about cutbacks and reducing spending, for example, reducing shopping and cancelling subscriptions. Beyond that, it could be asking for help from family or friends or you have to start building up debt. This could lead to someone returning to work far sooner than they should, simply because they can’t afford to take the time to recover properly due to the financial pressures being created.

There is, however, a way to protect yourself when you are unable to work. Income protection can be a relatively low-cost option to ensure that you have significantly less to worry about should you be off work due for an extended period of time due to serious illness, accident or injury. It may be that you need to have protection from day one or it may be that you do not need cover for a period of time, say 3, 6 or 12 months. Some people, for example, may wish to be covered up to their retirement age so if they couldn’t work again they would not have to worry about making ends meet until they retire.

Another benefit of income protection can be the fact that you can still be in receipt of Government benefits alongside your protection. So rather than one or the other, your income can be helped by both.

At Armstrong Watson, we are Chartered independent financial advisers and can discuss all aspects of your protection requirements with you based on your individual circumstances. We know from experience that protection of your income can provide peace of mind at the most difficult of times. If you'd like advice on income protection or to speak with one of our financial advisers near you, please get in touch on 0808 144 5575 or email help@armstrongwatson.co.uk

If you'd like advice on income protection or to speak with one of our financial advisers near you, please get in touch with John Hunt on 01387 955900 or email john.hunt@armstrongwatson.co.uk

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