Protection planning for illness or injury

19 Oct 2020

Michelle Holgate

Financial Planning Director

How long could you manage without your earned income?

One of the multifarious ways that the COVID-19 pandemic has affected our lives is that it’s got us all thinking a lot more about our state of health. We’re all more aware of any underlying issues that could put us at a higher risk, and the impact a serious illness would have. In turn, this prompts us to consider the protection we have in place for such an event.

The importance of income protection

Many believe that their employer would look after them if they were unable to work due to sickness or accident. But for how long would they provide this support? Many are surprised to find this can be a matter of weeks, if it is indeed offered at all.
 
The level of cover provided also varies dramatically and may provide a much lower income than you would need to meet your basic living expenditure, never mind fund the lifestyle you are accustomed to, or additional medical costs that may be incurred.

The long-lasting financial impact of illness or injury

Some clients advise they would rely on their other assets, such as savings and investments, to fund any periods of sickness. In this case, we would always prompt individuals to calculate how quickly their savings might be depleted, and how this would impact their spending in other areas and in future years.
 
Periods of absence from employment could also affect your savings into a pension for later life and therefore create a further financial impact for your future.

A suitable level of protection

There are various technicalities you need to be aware of to ensure you have adequate levels of protection in place.
 
For example, the definition of what is covered by the policy has a major impact on the benefits received. Is the policy an ‘any’ occupation, ‘all’ occupation or another definition of occupation? This would dictate whether you would be expected to take on alternative employment even if you couldn’t continue in your current job.

Seeking help with protection planning

Protection planning is a very important area of planning that can help ensure that your goals and aspirations, both now and the future, for yourself and your family can still be met. If you’d like to discuss your options, please call our Leeds office.

About the author

To contact or read more about Michelle Holgate, visit her bio here.

Find out more

Whether you are looking to invest for the first time, or have an investment portfolio already, if you don’t know where to begin, or know exactly what you are looking for, we can help. Contact your local Investec experts in Leeds today, to discover how we can help you to fulfil your financial goals, and live life the way you want to.