You CAN protect your family from the Budget cuts
(but it will cost you £6,700 a year)
FACED with a £156 billion budget deficit and an annual interest bill that threatens to hit £70 billion in five years, the Government is being forced to make drastic cuts.
Prime Minister David Cameron has warned that there are ‘inevitably painful times’ ahead.
You can protect your family finances from the cuts, but at a cost. But if you wanted to safeguard your income, mortgage, pension and children’s future, it could cost you £6,712.
INSURE YOUR SALARY
A RAFT of staff cuts are planned for the public sector — mainly in local government a nd in administrative roles.
But if the economy starts to slow again, then those in the private sector are not likely to be safe — especially if an expected increase i n VAT persuades shoppers to spend less on the High Street, and if house prices start to fall.
The only way to safeguard your income is with an income protection policy. Beware though. If you knew you were going to l ose your job ( or that your company was making redundancies) before taking out the policy, it would be invalid.
But that doesn’t mean you can’t take out a policy if you aren’t worried that it might happen.
The i ncome protection will match your salary for a limited period after you lose your job. Premiums depend on your age and job. You can only make a claim a certain number of months after taking out the policy — normally three to six.
According to brokers Life - search, a 45-year-old man taking out a £ 2,500 a month cover would pay £68 a month with Scottish Provident. For a woman, it would cost £115.71 a month, also with Scottish Provident because they are more likely to lose their job.
TOTAL COST: £816-a-year for a man (but £1,388 for woman).
PROTECT YOUR MORTGAGE
IF YOU lose your job, then you could struggle to meet your mortgage payments. A mortgage protection policy would cover your repayments should the worst happen.
Premiums for a policy covering a typical £150,000 loan on a rate of 4 pc would cost £38 a month.
TOTAL COST: £456 a year.
PAY DOWN YOUR DEBTS
IF YOU fear losing your job, then tackle any outstanding debts as quickly as possible. Go for those charging the most interest first.
Someone with a typical £5,000 credit card debt would have a minimum repayment of around £112 a month. It would normally take 28 years to clear.
Repay £300 a month and it would be wiped out in one year and seven months, according to financial data experts Moneyfacts.
TOTAL COST: £2,256 a year in extra payments.
TOP UP YOUR PENSION
THE state retirement age is set to rise, saving £108 billion by 2050. And higher-rate taxpayers could see cuts to t he amount of tax relief they get. This means we will all have to work longer before being able to claim our state pension.
The age at which both men and women can qualify for the state pension is being raised from 60 for women and 65 for men to 68 for both by 2046 at the latest.
A 30-year-old woman who still wanted to retire at 60 would need to save an extra £88 a month to plug this gap. A 30-year-old man who still wanted to retire at 65 would have to save an extra £27 a month.
TOTAL COST: £1,380 a year for a husband and wife.
SAVE FOR TUITION FEES
TUITION fees and interest on student loans are expected to increase. Universities have already pleaded for higher fees — some of even £20,000, but at least of £5,000 a year.
At present f ees are £ 3,290. Should they hit £5,000, families would be faced with finding at least an extra £5,130 for each child’s university education, on top of the £10,000 they already need to pay. Most parents only really start saving for their child’s university education when they hit secondary school. For two children of similar age, this leaves parents needing to find £122 a month to cover the extra fees.
TOTAL COST: £1,465
CONSIDER HEALTH COVER
STRUGGLING hospitals could be closed, and many local primary care trusts are threatened with budget cuts. So if you are worried about the care your family would get if they fall ill, then you need to have a family healthcare plan.
A BUPA health insurance policy for a family of four costs £95.60 a month.
TOTAL COST: £1,147.20.
Stark message: The Prime Minister David Cameron has warned of painful times