Income Protection In The Coronavirus Climate

Income Protection In The Coronavirus ClimateWritten on May 28, 2020 by Kirk Rice LLP

What is it like to be continuing to provide a service to clients and new enquirers? We are very fortunate that our work allows us to continue to work from home. Members of our team now work out of bedrooms, from dining room tables and perched on the edge of the sofa, not to forget having to negotiate access to the internet with their partners and children. Would you want to wake up your son to ensure he is out of his bedroom in time for you to be able to work in his room all day? The attraction of the concept of working from home is going to wear thin soon. It’s not glamorous or as perfect as it could be.

We have identified where in our houses the wi-fi and mobile phone signal is most reliable. We have provided training for clients in document scanning, electronic signing, secure document sharing and video meetings so we can continue to help and provide advice where needed.

What is that people are asking us about? Well, there are many queries about investment markets, and the actions we suggest are specific to each client situation. Advice is based on the experience of what has happened in previous crises, although the underlying cause of each event is different, certain aspects do repeat.

The second area of interest is financial protection and how to avoid being reliant on Universal Credit or other government benefits as these meet a very basic level of support. You will not qualify for meaningful help until you have practically no savings or assets. Many of the queries I have seen are about what happens when you cannot work due to sickness or accident.

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If you are employed, you probably have some form of sick pay arrangement, although I would say eight out ten employees have to go away from my meetings to ask their employer what exists at work. These plans vary enormously, so it is impossible to base planning advice on assumptions.

Recent examples of what is offered by local employers are:

statutory sick pay only
full pay for one month then nothing
full pay for six months, half pay for the next six then nothing
full pay for six months
half pay for the next 18 months then nothing
full pay for three months then 60% of pay until retirement age.

Once we know what is in place, we can tailor an insurance plan to complement what you have, and it could provide income until retirement or a shorter period if appropriate. More than a dozen companies offer these plans, and some are designed for particular occupations while many have additional services that may be suited to your circumstances. One of these is the well renowned Second Medical Opinion service which helps with checking diagnosis and treatment. This service is not otherwise available to individuals. Some employers may provide this service if they insure their sick pay scheme too.

If you are changing a job, it is sensible to compare the sick pay schemes and adjust your personal income protection plan to match the new one.

If you are self-employed or run your business through a limited company, we can advise a suitable insurance plan for you too.

Income Protection Insurance provides security of income during periods when illness or disability prevents you from working and can protect you from losing the wealth and assets you have.

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Any reader interested in discussing your income protection options should email info@kirkrice.co.uk to arrange a call with one of our financial planners.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. Tax treatment is based on individual circumstances and may be subject to change in the future. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.

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