As a Mortgage (and Protection) broker, having seen the recent Spring budget announcements, its hard to ignore one particular part of it. More so because I have some first hand experiences…
The part I am looking at is Sickness benefits from the government. If you are unable to work and the upcoming changes to it.
What we have now
Currently you can claim up to £97 per week, a whopping £5,044 per year (this admittedly is on top of other benefits). However, going forward this will be reduced to £50 per week for new claimants. And those under 22 will not even be able to make a claim.
This is happening because the number is people claiming benefits is increasing and it is seen as unsustainable by the government.
This means if you are unable to work due to ill health, one of the sickness benefits is being reduced to around £2,500 per year.
How this could affect you
Speaking from personal experience, after my first bout of covid I could not work for about 2 months. I recovered and was fine. My third bout of covid and I really struggled, my breathing was harder, I had brain fog and although I could still work my ability to work was limited and this went on for about 12 months.
I was in my mid-late 30s at the time. I was healthy weight, went to the gym, didnt smoke etc – on the face of it, a picture of health (even if I do say so myself). But unexpectedly I was hit by something that really made me realise ill health could hit any of us at any time. At the time I had a £500 a month income protection policy I had taken out years ago, but that would not be enough to pay all of my bills now.
What about Income Protection?
The first thing I did once I had recovered was to look at taking out a top up income protection policy. What I found that was despite the fact I had not stopped working and had seemingly fully recovered and also got to the bottom of what the problems were (believe it or not, covid gave me allergies to nuts/seeds – which meant sunflower oil which is in most things was giving me problems), I struggled to get cover.
Income Protection will pay out a monthly income if you are unable to work due to accident or sickness. Most people say they have cover from work. Thats probably true, but most sickness benefits are 6-12 months through the employer. The average income protection claim is 6-8 years – so what will you do for the other 5-7 years if you are Mr/Mrs average?
Other people think they will never get sick – I was one of them! I very quickly realised I am not.
In a nutshell
- The government are looking to reduce the welfare bill.
- You are not Superman and you could become ill.
- It is very unlikely you are adequately covered through work.
- The state will not provide.
- Of all the things you insure (car, home, pet, phone…) do you think your income should be on that list?
- Guess how much my cover for £1,000 a month costs? £17.05 per month. (£4,100 for the next 20 years, which I honestly hope is wasted money). But there are also other benefits to a protection policy included in the price.