For most of us the answer to this question is; ‘we would struggle to make ends meet’.
Taking out what is commonly known as ASU (accident, sickness & redundancy) can alleviate the fear that these situations produce. It will ensure that you have a monthly income should you be unable to work through sickness, injury or you if you lost your job through redundancy.
So you may not be able to avoid these events, but you can remove the fear of them happening and the potentially enormous impact it has on your family.
Having cover against Accident, Sickness and Redundancy is the best possible, and most important, income protection you can have.
As a guide a 40 year old taking a plan with a £1000 p.m. benefit in the event of accident/illness or redundancy, on a 30 day back to day 1 basis for payment, will pay between £29.00 p.m. and £50.00 p.m. depending on the qualification period of the redundancy cover. (Please see the Options below)
You can take out a plan that provides cover for all the above or take illness/sickness and redundancy as individual plans. In this case it is likely that you would actually have a better quality of cover across the two parts.
It is worth pointing out that although the redundancy cover is often referred to as ‘unemployment cover’ it will only, in the main, pay out in the event of Involuntary Redundancy’
There are many providers for this type of protection and each have their own specialisations exclusions and qualification periods which mean that policies taken out directly online or without independent advice may not be the best option for you, and may even fail to pay out in the event of a claim.
Which option is best for you?
At Roxburgh Financial Management we provide specialist help to people unsure how to go about choosing from the many Protection products available. We ensure that you are in a fully informed position before any application is completed with you. This gives you the peace of mind of knowing that the recommendations made by our specialists will be tailored to your specific needs and budget.
Six reasons to use us
- We do not charge for our advice
- We will explain the good, the bad, and the ugly
- We will ask the right questions
- We do all the work, right through to completing the application form
- We are independent and can access the full range of insurance providers
- We are regulated and authorised by the FCA
Accident, Sickness and Redundancy Options
As with all things the more options you choose the higher the price. Income Protection is no different and different insurers load the options differently. It is therefore important to determine what you need and what you would like so we can find the best Income Protection policy available to you in the market place. Below are some of those options.
This is the period (in weeks or months) following a claim before the benefit you are expecting is paid to you. The longer this period is, the cheaper the premium cost of the plan. It is normally based on what your employer sick pay (if any) is, and how long you can survive financially (i.e any savings you would use)
The number of weeks from when a policy starts before you can start to claim for unemployment. This can vary from Insurer to insurer but is typically 60 days.
This can be 1 year, 2 years, and 5 years per claim or up to your selected retirement age. The shorter the maximum period per claim the cheaper the premium becomes, however the plan will stop paying if you are still off work after the selected period.
Level or Indexed
‘Level’ means that the amount you receive will remain the same throughout the time you have the insurance regardless of whether your income or expenditure increases. Alternatively, the amount you receive can increase each year in line with inflation using either the retail price index or the consumer price index.
Guaranteed, Reviewable and Age Costed
With guaranteed premium policies, the basic premium you pay stays the same throughout the policy term unless you increase the required income amount (or if you have indexation). A plan with reviewable premiums (typically ASU) is reviewed by the provider each year (like Home insurance) and a new set of terms are then issued for the next 12 months. There may be no change, but the provider can change; premium, terms and conditions and, at worst, remove the cover. Age costed premiums, change each year based on your age. These changes are pre set by the provider and are either ‘set in stone’ or can be reviewed. However the provider cannot change the terms and conditions of the plan in any way or remove the cover.
Own or Any Occupation
When the ‘Own Occupation’ definition of incapacity is chosen the policy can pay out for any medical condition that prevents you from working in your own specific job role. When ‘Any’ is used the insurer will only pay you if you are unable to perform any occupation. ‘Own’ is more expensive than ‘Any’.
Waiver of Premium
If Waiver of Premium is selected then when you begin receiving an income from the insurance policy the premiums paid will be refunded back to you until the claim finishes.
Most ASU plans do not offer a Waiver of Premium option, meaning you must pay for the plan whether in claim or not.
Back to Work Benefit.
Receive a percentage of your income if, on returning to work, the illness or injury you claimed for restricts your duties and you earn less. Some insurers will also pay a top-up should you start a different occupation that pays less.
Benefits in Kind / P11D benefits.
Some insurers also offer the option of protecting the value of any employment benefits such as a company car or private health insurance.