Almost one quarter of British workers with savings say they wouldn’t last longer than a couple of months if they were unable to work.
However, less than five per cent of people protect their income.
These statistics are not surprising as people struggle between the short term and long-term financial priorities with the short-term winning out.
Some people think they don’t need income protection because their sick pay is sufficient, yet one in 20 people have been off work for over a year, and so are unlikely to be receiving sick pay at that point. Also only 14 per cent of people receive sick pay after six months with 24 per cent of people receiving no sick pay at all.
Other statistics indicate a clear need for income protection plans for the majority of the working population with more than 1,000 people a day being diagnosed with cancer, and half the population developing cancer during their lifetime.
So, with all this evidence available, it would appear to be not only sensible to have this cover but also essential. But, as not many people have this cover at the moment you may say it must be hideously expensive.
Fortunately this is not the case with income protection companies having very flexible products that will pay up to two thirds of your gross income if you are sick, and this money will be paid out tax free.
Most companies will continue to pay out for as long as you are sick which could take you to retirement age. They can delay when they start to pay out to coincide with when you believe your savings will run out, or when your company stops paying you. The longer you delay the cheaper the premiums.
Example of premium cost are that a 30-year-old covering £200 per week with no deferral to age 65 would cost around £22 per month which is not breaking the bank, and compares very well to the premium that 25 per cent of the population pays for Petplan. So the message could be that although we love our pets, perhaps we should love ourselves just a little bit more.