Currently, one in four UK families are headed by a single parent. If your family relies on your income alone, what would happen if you were unable to work due to disability or illness? Read on to find out how Income Protection could help to provide a financial safety net for you and your family.
What is Income Protection?
Income Protection or IP as it is also known can cover loss of income if you are unable to work due to illness or an accident.
The policy will normally pay out a tax free monthly sum to cover your earnings until you are able to return to work or until you retire.
The amount of money that you can claim may not fully replace your monthly salary, but you can expect to receive about half to two thirds of your earnings before tax.
Also, you can choose when to start receiving payments – it is common place to wait a month but you can select a much shorter period with some providers.
Here’s some key terms-
• Deferred period (also known as waiting period)– your insurance provider will only pay out after a deferred period of time. Typically, this is from 2 to 52 weeks, with lower premiums typically associated with longer deferred periods. Many people chose to defer receiving payments until their employer sick pay runs out.
• Short term policy– this type of cover is designed to protect your income for a set period of time e.g. 12 months or 24 months
• Long term policy– will protect you from long term illness or disability that may mean that you will never be able to return to work. A long term policy should pay a benefit for the term that you have chosen subject to a maximum policy term outlined in its terms & conditions.
Why do single parents need income protection?
According to the family support organisation, Family Lives:
‘Becoming a single parent can be very overwhelming and stressful time in your life. Most of us don’t plan to bring up children on our own but unfortunately circumstances can change in family life.’
Many single parents feel overwhelmed at times, particularly as they are often responsible for the financial security of their family. The mortgage, household bills and car loans soon add up and children’s clothes, hobbies and pastimes are expensive too.
When you receive a regular income, you can budget accordingly safe and secure in the knowledge that you can provide for your children. However – sickness, injury and disability could threaten your security, leaving you vulnerable to financial hardship.
A recent study by Gingerbread and the Office for National Statistics showed the average age of UK single parents is now 39 (ONS, 2017)
Single parents in this age bracket have a whole host of financial responsibilities. If you have little or no savings and could not rely on employer or Statutory Sick Pay alone, it is worth considering Income Protection.
Income Protection could help to cover the costs of:
• The mortgage
• Household bills
• Car loans
• School and University fees
• Children’s hobbies and interests
Shepherds Friendly Income Protection
At Shepherds Friendly, we offer an Income Protection plan that is available to both the employed and– self-employed. With premiums from as little as £5 a month, our plan is affordable and can start from day one of your absence.
Our Income Protection plan can be tailored to meet your specific needs and circumstances, providing cover up to the age of 70. We also offer a short-term option of 2 years cover or longer if required.
We give you control over your policy – if your circumstances change, the plan’s guaranteed insurability option allows you to increase your level of cover at times such as marriage, the birth of a child or taking up a new job with increased income.