A golden goose needs insuring

Protect your monthly payments for peace of mind If you had a goose that laid a golden egg each month, you’d probably look after it really well.

But would you think to insure it, so that if it got sick and stopped laying the eggs, you would have some insurance payments to live off, rather than go hungry?

I would. It makes complete sense to me as the goose is providing your lifestyle and paying your bills.

So if you agree with that, let’s try a second question: Do you insure your own income?

So many of us are our family’s goose. We go to work every day and bring home our golden egg each month in the form of our pay cheque.

But if, for whatever reason, we couldn’t work one day, what would happen to our income?

If we are lucky and work for a larger employer, we may to have up to six months of long-term sick pay.

But even then, what happens if we’re not well enough to return once that time is up? How long could you survive without any income before your direct debits start to bounce?

When we’re not well, we need security, peace of mind and time to allow ourselves to recover. The last thing we need is the stress and pressure of having to rush back to work to pay the bills if we’re not 100% fit.

The way we do that is with income protection insurance, which is vital for so many people who have little employer support and financial commitments to keep.

Income protection insurance will pay out a tax-free income if you’re unable to work because of an accident or long-term sickness.

It becomes payable after a deferred period, also known as a waiting period, which is typically between three and six months. The payments generally continue until you are well enough to return to work, or the policy comes to its contractual end.

Think of it in this way: you’re given a choice of two jobs that are identical in every way except one.

The first job gives you an annual salary of £38,600 – the UK average – but you receive no long-term sick pay benefit. In the second job you’ll earn £37,400 per annum but if you’re off work sick, they’ll pay you until you can return to work or you retire.

The one you’d take is a no-brainer, isn’t it? And that’s how you should think about insuring your income.

As a rule, we don’t really like insurances because they’re not exciting things to have or to arrange.

But we do need them – and just like your car or house insurance, this one belongs on the essential list.

To learn more about financial planning, visit warrenshute.com