With communities and businesses rebounding after the Covid-19 pandemic, families have a window of opportunity to take the necessary steps towards safeguarding their finances and building a financial safety net for the future.
The pandemic saw many people facing the harsh reality of illness and its ability to strike anyone at any time, with financial consequences causing significant stress for families across the country. More than ever, families are seeking to put measures in place to build a plan for when things could go wrong.
It’s not only illness and unexpected periods of unemployment that can wreak havoc, but it’s also important to consider covering unexpected bills for cars and household appliances. Savings can help in both cases, but it’s also ideal to consider the benefits of insurance to provide an additional safety measure should savings fall short.
What Help Can I Get from the Government?
While many people believe that illness and unexpected events may not happen to them, situations can change dramatically at any time. As highlighted by the pandemic, statutory sick pay is far from enough to cover many people’s essential bills over an extended period of time, and after 28 weeks, those still unable to work will need to apply for Universal Credit, which comes to around £411 a month for single claimants over 25.
For those looking to protect their income further in order to pay essential bills and mortgage costs, income protection is a wise decision – and an independent financial adviser can help with finding the best solution for you and your family.
How Does Income Protection Provide a Safety Net?
Income protection works to insure a percentage of your take-home salary. If you are unable to work through ill-health, whether it be mental health reasons or through physical problems, the insurance will pay out. Many insurance offerings differ between the conditions they cover, with payments starting after a deferral period. Again, the length of the deferral period depends on the provider.
Those who are self employed will need to verify medical evidence with the insurer to support their claim, so the insurance provider can start to pay out within the terms of the policy. Once you return to work, the insurance provider will stop paying out, but the cover will still be there if it’s needed again in the future.
What Other Types of Insurance are There?
Critical illness insurance can also provide a safety net by paying out a one-off tax-free lump sum if you are diagnosed with one of the serious conditions listed in the provider’s policy, for example, cancer, heart disease or stroke.
The payment can be used to pay off any outstanding bills, such as a mortgage, or even just to provide more of a financial buffer, allowing you more time to recover from the illness.
KLO Financial Services
As highlighted by the uncertainty of the pandemic, a financial safety net for you and your family is essential for peace of mind and security in the event of illness or injury. If you’d like to find out more about sourcing the best cover for you, speak to a personal financial adviser at KLO Financial Services.