Parents are worried about falling ill.

 

From research done by Aviva, ‘Worried sick about falling ill, 2017’, it shows that 43% of parents are concerned that if they or another family member develops a serious illness what will happen to their finances. Despite this figure 76% of those questioned admitted that they have no back-up plans that would replace the income they stand to lose due to ill health.

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What are the possible solutions?

Income Protection policy

One solution is to take out an income protection policy. These policies pay out if you are not able to work and earn money due to illness or injury. They are designed to cover your basic monthly financial expenses such as mortgage or rent, food and bills. It provides income for those that are self-employed or employees who would receive limited or no sick pay from their employers.

It is usually your net monthly earnings minus any state benefits you may receive. It could be up to 55% of your gross earnings and the income is tax-free.

Policies usually pay out between 4 to 52 weeks whichever is the deferred period you have chosen. They continue to pay until you return to work or when the policy term comes to an end.

Critical Illness Cover

This is a standalone insurance policy that pays out a lump sum if you are diagnosed with one of the conditions listed in the policy, such as some Cancers, Parkinson’s, Heart Attacks, Stroke etc.  It is often linked with life insurance so pays out on diagnosis; you would still have life cover so your dependants would be looked after should you die unexpectedly.

Combined life insurance and Critical Illness Cover.

This insurance pays out if you die or get a critical illness whichever is the first event; you get one pay-out so if you claim for critical illness your life insurance will end. It is less expensive than taking out two separate policies but you’ll only get one pay-out.

As part of a mortgage protection (decreasing term) life insurance policy

This policy gives you enough life insurance and/or critical illness to cover your mortgage. With a repayment mortgage your debt is paid off in full if you die or are diagnosed with a critical illness and again only one pay-out.

If you would like independent advice on financial protection for your family’s future please contact us on our Freefone number 0800 193 1066 or click on the Protection enquiry button.