One in five workers would be hard hit by long-term incapacity

How would you cope if ill health meant that you had to stop work for six months or more?  According to a survey1, 44% of respondents said they would have to live off their savings, but only 25% said they had enough put by to enable them to cover their monthly earnings for such a  long period.

The survey also reported that many would rely on state pensions, their partner’s income or ask their parents for help. Women and the self-employed were identified as being most likely to be financially affected by long periods off work. With state benefits likely in most cases to be just over £100 a week, it could be hard for many workers to make ends meet.

INCOME PROTECTION POLICIES

Coping with a long-term illness or injury can be stressful enough without the added pressure of money worries. Fortunately, there are policies available that can help bridge the financial gap. Taking out an income protection plan offers peace of mind and security for your family, and provides funds when they are needed most.

These policies are designed to pay out if you’re not able to work and earn money due to illness or injury, and, in some cases, forced unemployment. They provide valuable protection for breadwinners, the self-employed, and employees who receive limited or no sick pay from their employers.

TAX-FREE PAYMENTS

The maximum amount you can claim is usually your net monthly earnings after tax, minus any state benefits you may receive. This could be around 65% of your gross earnings and it’s usually tax-free. Policies pay out following your chosen deferred period, typically between four and 52 weeks, and can continue until you return to work or the policy expires at the end of a fixed period.

There’s a wide range of policies and benefits available; talking to your adviser will help you make the right choice.