People are being warned to take out a little-known insurance policy that could be a lifesaver if they lose their job or fall sick.
Many Brits are desperate to safeguard their finances from any potential tax rises, benefit cuts or income changes that could hit them at the very same time that the energy price cap rises by 10% and the winter bills settle in.
However, the simple insurance move could make all the difference for just £5 a month, one expert claims.
Max Jarrold, Chief Growth Officer at Shepherds Friendly, warned that a lack of awareness and understanding could be preventing Brits from getting the income protection they need, with only 14% of the population reportedly having income protection at all.
There’s an additional gender disparity in this as men were more likely to take out income protection than women while 29% of Brits regret not having a policy and 47% those who did take out the insurance regret not getting it sooner, according to research by Shepherds Friendly.
The expert told Express: “In today’s economic climate, many of us will be prioritising our shorter-term financial needs, such as paying off bills or saving for a holiday. As a result, there isn’t a wide understanding when it comes to what long-term financial protection nets there are to help prevent you from being unable to pay for necessities if you lose your income due to long-term sickness or injury.”
This is precisely what income protection offers. It’s essentially insurance on your income or financial protection against being unemployed.
Max further elaborated, pointing out that many people get life insurance to protect their loved ones when they’re dead but don’t have any protection for if disaster strikes and they survive.
This planning hole could potentially even leave people unable to afford their life insurance payments.
He explained: “Only taking this cover can leave us financially vulnerable during our lifetimes should we become ill or experience an injury that means we can’t work. If you’re unable to work for a long period of time, Statutory Sick Pay may not be enough to cover your expenses, as you can only claim this for up to 28 weeks, amounting to just £3,269 in total.”
The expert noted that some plans can cost as little as £5 a month and provide you with a significant portion of your salary in the worst-case scenario, with Shepherds Friendly providing up to 70% of your income.
As for the gender disparity the research revealed, Max noted there could be several factors driving it including: “The gender pay gap could be directly feeding into this, leaving women with less disposable income to pay for protection policies.
“Alternatively, the gender pay gap could be resulting in large differences in take home pay for certain households, and there could be a bigger focus on the higher earner taking out protection policies. Whatever the reasons, it’s just as important for women to consider the value of income protection to prevent them being financially vulnerable in the event they can’t work.”