Been made redundant lately? How long could you survive if it happened tomorrow at 9.00am? According to recent research
1, almost two million of you would be flat broke in just seven days!
This is despite the fact that almost all most financial advisers agree that it is essential to have at least three to six months after-tax income in an instant access high-interest savings account. This is meant to be a
minimum level of protection against illness or redundancy, both of which tend to strike without warning.
But it is easy to see from the above statistic that saving is a tough job for many, not to mention the fact that a further 15% of people could only manage to pay their way for between a week and a month. And, if you have run up expensive credit card bills and/or a big overdraft, you may well be better off paying down your debts before trying to build up a decent savings fund.
If you can’t save… consider income protection insuranceBut what should you do if you are too overstretched to save but you want to protect yourself from the unforeseen. Well, if not spending more than you earn seems impossible, one solution is to take out some form of
income protection insurance.This insurance is designed to pay out a fixed monthly amount in the event of you falling ill and being unable to work and/or you being made redundant. The amount you get will depend on how much you are prepared to pay each month in a premium.
If you wanted to cover a mortgage of £500 a month, bills & food at £200 a month, and £100 a month to pay credit card and loan interest you would need to find around £28 a month in premiums in return for £800 a month tax-free unemployment benefits.
Pick and mix the options to get the right level of coverIf you decided that you wished to be covered in the event of both redundancy and sickness then that would increase your monthly premium to £44.50 a month for a benefit of £800 a month.
Most decent policies are sold by insurance brokers rather than high street banks and building societies which often attempt to sell you overpriced versions of the same cover. As with all insurances it is important to read the small print and check the exclusions. Importantly, if you already have reason to believe you may be made redundant then it is too late to take out cover. Also, if you are self-employed then many of these policies may not be sufficiently flexible to take your circumstances into account. Caveat emptor.
We have chosen to refer you to a website owned and operated by Burgesses Limited who are specialists in loan protection insurance.
Burgesses Limited has been recommended in a large number of local and national newspapers and magazines including The Times, The Telegraph, The Guardian, The Mail on Sunday and The Financial Times. In addition, its products have topped Which? ‘best buy’ surveys and it is the exclusively appointed provider of protection insurance to the members of The British Insurance Brokers’ Association (BIBA).
Find out more about income insurance.1 Research conducted by TNS for Prudential.
