Income protection

Your income is your livelihood.

How would you manage if you were suddenly to be unemployed due to sickness, an accident or unexpected redundancy? Without your income how would you pay for your mortgage and your day to day living expenses? Would you be able to repay debts? Would you be able to keep your car?

These are important issues to consider.

Marquis Financial Planning can advise you on a number of ways to protect your income such as income protection plan, critical illness cover and accident, sickness and unemployment cover. Loss of income can happen to anyone but there are ways to protect against its consequences.

Accident, sickness and unemployment

Accident, sickness and unemployment cover, or ASU, is an insurance policy which specifically covers you for mortgage repayments in the event of a sudden loss of income due to an illness, accident or non-voluntary redundancy. It will pay out a monthly sum to you, usually for a maximum of 12 months, possibly up to 24 months for accident and sickness only, which is to be used for mortgage costs only.

Unlike income protection plans, ASU has the advantage that it is available both for individuals and for couples on a joint mortgage.

You select the level of potential benefit you require at the outset and this will determine the monthly premium you pay. Another advantage of ASU is that premiums are not affected by factors such as age, health and smoking habits.

This is an increasingly popular insurance in the UK, Marquis Financial Planning can help you select the policy and level of cover suitable for your circumstances.

Income protection plan

Long-term illness may be something we prefer not to think about but relying on the state for benefit may not be a good idea as eligibility is strict and payments are low.

Income Protection can offer the solution as it will pay you a replacement income if you cannot work due to illness or accident and the payment will be a percentage of your current salary (usually around 60%).

It is called “permanent” because the insurer may not cancel the policy no matter how often you claim for benefit, although policies usually expire when the policyholder reaches 60 or 65.

Critical illness cover

Critical illness cover pays out a guaranteed cash sum on diagnosis of certain specified critical illnesses and can include permanent disabilities.

The illnesses covered vary from policy to policy, but they usually include cancer, heart attack/coronary bypass surgery, kidney failure, major organ transplant, multiple sclerosis and stroke.  If you are unlucky enough to be diagnosed with such an illness the last thing you will want to worry about is money.

After a specified period following your diagnosis, you would receive a tax-free lump sum payment. This money can then be used however you wish, such as to repay your mortgage and/or other debts and to help you with day-to-day living expenses. Then you can concentrate on the more important matter of getting better