Did you know that illness, rather than accident, is the biggest cause of disability for working aged people?1 Around one million workers a year find themselves unable to work due to a serious illness or injury. It’s a truism, but we never really know what’s around the corner. Sadly, most of us will have friends, family or colleagues who have suffered serious mental or physical illness that prevents them from working – or worse still, has caused their premature death.
With a little bit of luck and a fair wind behind us, we hope we won’t personally be affected. As the new year begins, we’ll aim to prolong our lives by resolving to eat more healthily, exercise more frequently and take more time out with our family and friends. But can we really afford to leave things to chance when our property, family and wellbeing may be at stake?
Sound financial planning includes weighing up the risks associated with your becoming ill and being unable to work for a prolonged period. If you’re confident that you have enough savings to fall back on, have a partner who could meet the additional costs or are covered by an employee benefit scheme then you may not need to take out additional cover. However, if you don’t fall into one of these categories you should consider taking out an insurance policy to mitigate the risks.
A number of options are available to you:
Critical Illness Insurance
Critical Illness Insurance will pay out a one-off, tax-free, lump sum amount if you get one of a number of specified conditions covered by your policy. Typically, these include stroke, heart attacks, certain types of cancer and conditions such as multiple sclerosis.
Income Protection Insurance
Income Protection Insurance will provide you with a regular income if you can’t work because you’re ill or injured. It covers most illnesses that leave you unable to work and payments (usually around half to two-thirds of your normal pay before tax) are made until you are able to return to work, retire, die or reach the end of the policy term – whichever is soonest.
Life Assurance / Life Insurance
Life Assurance / Life Insurance provides your dependants with a pay out upon your death within a period specified in your policy.
Private Medical Insurance
Private Medical Insurance can help you to avoid waiting lists and get treatment quicker, thereby speeding up your return to work.
The option(s) you choose will depend upon your individual circumstances. Brunsdon Financial is able to offer expert advice on all of the above insurance policies. Please contact us to book an appointment with one of our Advisers or visit our web page .
As with all aspects of personal finance, our advice is never to leave these things to chance.
Source 1 – Blog by Jason Butler, We need to talk about risk in investing, Financial Times, 18 September 2019