Accidents and illness can and do affect people when we are least prepared for them and can have life changing implications.

If you are employed and you are off sick then generally you will receive sick pay from your employer for a limited amount of time then it will revert to statutory sick pay which currently is £96.35 per week for up to 28 weeks. If you have a family and a mortgage how would you manage on this small amount each week?

If you are self-employed and you are off sick then you don’t get the luxury of receiving sick pay from your employer and therefore the burden on yourself is huge. If you’re a painter a decorator and fall off a ladder breaking an arm how long would you be off work for? If you’re a builder and injur your back then it is going to take time for you to recover and return to work.

It is vitally important to have an emergency fund of approximately 3-6 months worth of outgoings to help manage short term peroids of financial loss however what if your illness prevents you from working long term? What would you have to change in your lifestyle in order to manage financially?

The good news is that you can do something to protect your income in case of long term illness or injury which prevents you form doing your own job. This is called Income Protection which generally will pay out up to 65% of your pre tax earnings until you are able to return back to work or to when the plan ends which could be your state pension age. A self-employed person may want a plan that will pay out after the first four weeks of incapacity whereas an employed individual may require a plan that pays out when their sick pay at work ends. This period is known as the deferred period and as such the longer the deferred period the lower the cost. This takes me back to the importance of an adequate emergency fund to help in the short term. 

If cost is an issue then there are plans which will pay out for a limited period, i.e. 12 months or 2 years.

It is important to consider this type of protection alongside your whole financial circumstances.

If you wish to have a chat about this or anything else to do with your finances then get in touch now, don’t leave it until it’s too late. We are here to help you and your family. We are a local, friendly team of Independent Financial Advisers with many years of experience. 

Give us a call on 01788 57 11 22 and we will be more than happy to help.

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor. 

PJL Financial Services Limited are authorised and regulated by the Financial Conduct Authority. 

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