Do you have a back-up plan if your income stops?
Around one in eight (12%) men and women are forced to stop working before state pension age due to ill-health or disability, according to research recently published by the TUC.
The TUC report, Postponing the pension: are we all working longer?1, found that nearly half a million workers who are within five years of state pension age have had to leave the workplace for medical reasons.
Hold that thought and now consider another study, this time for the housing charity Shelter2, which found that one in three families in England could not pay their housing costs for more than a month if they lost their job. Furthermore, nearly a quarter would be unable to pay their housing costs at all. Nearly half of families in the survey named the cost of housing as the biggest drain on their budget.
What’s the answer?
It’s a fact that nasty things happen in life. You could lose your job, and if there's nothing, or next to nothing in the bank, then this could potentially be very hard to cope with.
One way to deal with such a possibility is to save, but how much money should people have put away just in case?
Anti-debt charity Step Change says that if every household in the UK had £1,000 saved, it would reduce the number falling into problem debt by half a million3.
And Martin Lewis, founder of MoneySavingExpert.com, recommends each household sets up an emergency fund to the value of "at least six months' worth of bills"4. But such a level of savings can be hard to build up, and is diminished very quickly in the event that you have no income.
A better route is to consider taking an income protection policy.
Income protection provides people with a regular income should they be off work due to injury or illness, an income that helps pay the bills and removes many financial worries during recovery.
According to research, just 12% of employers support their staff for more than a year if they're off sick from work. And when consumer association Which asked the public, just 9% said they have some form of income protection, compared with 41% who have life insurance and 16% who have private medical insurance.
Income Protection Plus from PG Mutual
PG Mutual aims to protect people with an affordable plan for those times when it is needed most - a financial safety net should the unexpected happen.
Income Protection PLUS helps with the payment of a regular income from the first day of ill health or injury until the age of 65 (or until return to work) and includes an investment element which pays out at maturity of the policy. Plus, it comes with a range of fantastic member benefits giving access to discounts, cashbacks and offers on popular brands and services.
For convenience the plan is customisable and can be reviewed at any given time, paying an income at an affordable price for as long as is required.
So, isn’t it time you gave some thought to your back-up plan?
You might want to consider what would happen if you were unable to work due to sickness. Do you have enough savings to last you three months, six months, or longer? Do you know what government benefits you would qualify for, and for how long? In short, are you financially secure enough to support your family and your lifestyle? If the answer to any of these questions is no, you might want to visit PG Mutual for a quote for Income Protection Plus.
1 Postponing the pension: are we all working longer. TUC, published 5 September 2016.
2 One in three working families only one pay cheque away from losing their home. Shelter, 9 August 2016.
3 An Action Plan on Problem Debt, Step Change Debt Charity. January 2015.
4 How much of a savings buffer do people need? Justin Parkinson, BBC News, 15 March 2016.
^ For full Terms and Conditions, visit www.pgmutual.co.uk.
As a member of ICAS, you are entitled to a 20% discount off your first two years' cover^. Remember to use ‘ICAS’ in the discount code.
About the author
Mike has over 25 years’ experience in financial services, having worked with large corporate organisations as well as being a successful consultant within the mutual sector. He previously held a variety of senior management and board roles in sales and marketing with the Skipton Building Society Group. As a consultant, Mike worked with a number of building societies to assist in increasing business and staff development, within a regulated environment.
Mike joined PG Mutual as CEO in 2011, overseeing the rebrand of the business which resulted in subsequent business development across a wider professional market. This has, in turn, seen record membership figures achieved by the society, and a substantial increase in assets. Mike was delighted to be nominated for the Hertfordshire Business Awards’ ‘Business Person of the Year’ and ‘Judges’ Award’ in 2013. Mike is the Chairman of the Friendly Society Collective.
About the company
PG Mutual are a not-for-profit membership organisation specialising in providing income protection insurance for professional people since 1928. As a friendly society, they don’t have outside shareholders, and therefore return any profit to their members.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.