Q. I’ve recently become self employed and want to make sure my income is protected in the event of being unable to work as a result of an accident or illness – can I insure this risk?
Dear Reader,
This is a very common question as there is a lot of confusion in general about protecting your income or insuring loan repayments in the event of your income ceasing.
We don’t usually think of our current income and our future earnings as an asset. However, if you think about it, the money you earn pays for almost everything you have……mortgage, car loan, bills, education, insurance etc. Without it, you are faced with a pretty worrying picture. That is why Income Protection is so important and is appropriate to anyone earning a salary or more importantly, if you are self-employed. With Income Protection, you pay a monthly premium which is based on your occupation and your present state of health. This ensures that in the event of an accident or illness which leaves you unable to work, the policy will pay you a regular income until you recover. As there are no restrictions on the type of injury, illness or disability that the policy covers, you get complete peace of mind. Best of all, you get to choose and tailor an Income Protection plan that suits your individual circumstances with a range of cover types.
In general, we tend to over-estimate sick pay arrangements and the support provided by the state. Some employers will cover sick pay for the first 6 months of illness, however, they are not obliged to. The State Illness benefit for 2012 is only €188 per week for a single person and as you are self-employed, you wouldn’t even qualify for this. Therefore, an Income Protection plan should form a core part of your financial planning needs for the future.
This column is a reader’s service and is not intended to replace professional advice.
Mantra Consultants T/A ODCL Financial Services and ODCL Mortgages is regulated
by the Central Bank of Ireland.
