I am concerned that I may get sick and not be able to work. I think I get some sick pay in work but don’t know the details. Other than ask my employer, what should I do?
Your health is your wealth.
Many people now have private health insurance and coverage is growing slowly. It’s worth bearing in mind that not that many people could ever afford it. So what else could you be doing to protect your financial security if you suffer an accident, illness or injury?
What many people don’t immediately realise is that your health isn’t the only thing to take a knock if you are unfortunate to fall ill or have an accident that leaves you incapacitated. While the wonders of modern medicine – public and private – can have you back on your feet within days or weeks, for some people it can take months and even years before they can return to work.
If that’s the case, then the financial consequences can be troubling. If you are luck you may get “sick pay” but some employers’ sick pay cover comes to an end within 3-6 months. After that you would be reliant on State Disability Allowance which in 2017 is just €193pw for a single person. If you’re self-employed then neither sick pay cover nor State Disability may apply. So, you can easily see how your finances might well be the next thing to suffer if your health does.
Fortunately, Income Protection is a financial product that is specifically designed to help you cope with the financial consequences of any accident or illness that leaves you unable to work and earn an income. Not only is Income Protection affordable, but like private health insurance, you will enjoy tax relief on any premiums you pay. Which makes it doubly attractive for the times we are living in.
What Income Protection does is provide you with an alternative source of income for the duration of your recovery, either until you return to work or reach retirement age. The policy will begin to pay you an income of up to 75% of your normal income after a waiting/deferred period. If you are hospitalised during your deferred period, your Income Protection policy will still pay you a replacement income for each day of your hospital stay.
How you use your alternative income is up to you. If you don’t have private health insurance then it could help you cover some of the costs of treatment, just like your normal income could. Most of all, it will help cover many of your day-to-day living expenses such as your mortgage or rent, utility bills, groceries, fuel, education fees and so on.
Even if you do have private health insurance, remember that while it’s designed to cover some or all of the costs of your treatment, it will not replace your income if you are too ill or injured to work. Plus, even when your active treatment and medical care has ended, it can still be a long time before you are ready to return to the workforce.
Another option is Specified Illness cover. This is a product that gives a tax free lump sum in the event of a specified illness. This can be used to pay off all or some of your mortgage, clear debts, replace income and/or pay for treatment.
An independent financial broker is the best person to talk to about what protection policies you need to look after your health and your lifestyle. They will be able to give you a range of competitive quotes for each product and help you compare one policy against another. If your health really is your wealth, then make your financial broker the first consultant you see.
This article aims to give information, not advice. Always do your own research and/or seek out advice from a Financial Broker before acting on anything contained in this article for a full list of all our services click here http://www.sefs.ie