By Christopher Hall, proprietor of the Mortgage Advice Bureau in Norwich
People are often unaware of the financial impact on their income and lifestyle if they were unable to work because of sickness or becoming unemployed. Without an adequate regular income you could be risking your home and the standard of living to which you have become accustomed. With the downturn in the economy, most of us have found ourselves wondering how secure we are financially. In the current climate, the threat of redundancy is a very real one – 270,000 people were made redundant from Dec 08 to Feb 09.*
Coupled with the frighteningly inadequate state benefits – Statutory Sick Pay is only £79.15 per week# – it is more important than ever that advice is sought, to protect yourself in these turbulent times.
It is essential that you choose the correct product for your circumstances because when the worst happens you need to be confident that your claim will be settled quickly to reduce the stress involved in difficult times. Recent statistics show that one leading insurer paid out 96.3% of death claims in 2007 and 88.2% of critical illness claims in 2007**.
Which policy should I take out?
Income Protection – This type of plan is designed to replace your salary and will provide a tax-free income if you are unable to work through disability. The policy pays a monthly tax-free income until you recover – right up to retirement date if needs be and the payout can be level or set to rise with inflation. The maximum cover you can have is typically half of your gross income but as it is paid tax-free it could mean that you can maintain a similar level of take home pay. Some employers provide this cover as part of your overall employment package.
Accident Sickness & Unemployment – This policy is designed to cover you if you lose your income because you are made redundant, or you are unable to work because of an accident or sickness, and protects your household outgoings i.e. mortgage, credit cards, loans, council tax, utility bills and life cover for up to 12 months. It does not have to be linked to a mortgage and tenants in rented accommodation can also take this cover out to cover their rental payments and household bills.
Mortgage Payment Protection – Similar to accident sickness and unemployment, this policy is usually linked to a mortgage and covers mortgage payments and associated insurances if you are unable to work because of accident sickness or redundancy for up to 12 months.
With the array of products available a Financial Adviser can guide you through the key features to ensure you choose the most appropriate cover to suit your individual needs.
To make a no obligation appointment contact the Mortgage Advice Bureau Norwich on 01603 867254 or visit www.mortgageadvicebureau.com/norwich