Could you live off just £94.251 per week?
Doesn’t sound a lot? However, that is all you would receive from the Government if you were unable to work due to illness or accidental injury and had no continuing income from your employer.
We take our income for granted and have a cavalier attitude to protecting it but for many of us losing our income for even a month would lead to dire consequences. Income protection should be top of your list when it comes to protecting your livelihood and is probably one of the most cost effective ways to protect your family and your lifestyle.
I don’t need income protection I have savings
Did you know that there are almost 2.5 million people claiming some form of illness related benefit2 in the UK and these people have been off work for 3 months or longer? Think about that for just a second.
Without an income protection contract how long would your savings actually last? Income protection insurance is designed to make sure you don’t have to spend your life savings on taking care of bills because it covers enough of your income to allow you to meet your financial obligations.
An income protection contract is more than just another insurance contract – its peace of mind for you and your family.
Case Study 1 – Geoff, 55, Employed Locksmith
Geoff was a Locksmith working for a company based in Birmingham. As the main earner for his family he joined the Society to make sure that he could carry on supporting his family if he lost his income due to illness or accidental injury.
Geoff has been a Member of the Society for over 20 years. In 1989 he damaged his knee ligaments and was able to make a claim for his loss of earnings. In 2001 he fell and broke his arm, again his income protection contract was there to help support him and his family.
At the age of 55 Geoff was diagnosed with Parkinson’s Disease and was forced to give up work. He knew that his income protection contract would be there to support him and his family and made a claim to the Society.
Geoff has been unable to work since 2007 and has been receiving benefit from Cirencester friendly ever since totalling over £27,000. This has helped lift the financial burden on his family and allowed them to concentrate on caring for Geoff when he needs it most.
Many of our Members, like you, do their upmost to make it into work everyday even if they are feeling a bit under the weather but they still understand the importance of protecting their family. They know that try as they might sometimes they just can’t go to work. For them their income protection contract means they don’t have to worry about anything but getting better.
% Claims Breakdown 2011
I don’t need income protection because I never get ill
So you never get ill and you don’t take time off work? What if you have an accident?
30% of income protection claims paid out by Cirencester friendly in 2011 were for accidental injury demonstrating the need for people to protect their earnings from the effect an accident can have.
Case Study 2 – Mark, 45, Self Employed Mechanic
Mark was a self-employed mechanic from Sheffield and like many of our self-employed Members felt that he didn’t really take time off for illness.
However, after talking to his Financial Adviser he realised that without his income his family and their home would be at risk. He took out an Income Assured Plus Contract and became a Member of Cirencester friendly.
Mark had a fall at work and was left unconscious. He suffered severe brain damage and was unable to continue with his work. The Government provided Mark with benefits of just £52.50* per week to live off and support his family.
Thanks to his Income Assured Plus Contract Mark was able to make a claim to the Society. He had a contract for 10 units which amounted to an extra £105 per week tax free and continued to receive this for the full length of his claim.
* This was the amount available to Mark under the Government Scheme at the time of Claim.
Income protection - from Cirencester friendly
As a Holloway income protection provider, Cirencester friendly likes its Members to share in its success. As a Member of the Society not only will you get an award winning income protection contract but you are also eligible to participate in the Society’s surplus distribution scheme.
We are a mutual organisation and therefore owned by our Members. This means we run the Society for our Members and have no external shareholders therefore any surplus made by the Society after the deduction of the costs of running the business can be shared between our Members.
For a fixed additional premium all of our Members can opt in to the scheme and receive a share of the Society’s surplus. This is accumulated throughout the life of your contract and is payable to you in a tax free lump sum3 at the natural end of your contract (usually retirement).
So not only are you protecting your family and your lifestyle you are also getting something back at the end of your contract.4
For more details on Holloway income protection insurance click here.
1. Department for Work and Pensions (DWP) April 2011: based on Employment and Support Allowance £91.40 per week for those in the Work Related Activity Group. Alternative benefits such as Incapacity Benefit and Statutory Sick Pay apply in some cases. For Full details refer to the DWP.
2. Figure from Department of Work & Pensions Tabulation Tool. Includes those claiming Employment Support Allowance, Incapacity Benefit and Severe Disablement Allowance for 3 months or longer as at August 2010.
3. This is based on our understanding of the current law which could change in the future.
4. Surplus shares are not guaranteed and are dependent on the success of the Society. The amount allocated to each Member is calculated on the number of units held. A note detailing the bonus rate can be found in the most recent Annual report and Accounts. The agreed bonus rate can change year on year and can be increased or decreased depending on the success of the Society.