Anyone can lose their income
30 Oct 2020
A freak dog/seagull accident put Kristian Lovell on the shelf.
Fourteen months on and he’s yet to return to full financial health.
“Leash in my hand, I goaded the little pup to chase the seagull. I didn’t think he’d actually do it.
As the dog raced off, I slipped. I tried a sort-of MC-Hammer-dance to avoid breaking a leg … but that’s exactly what happened.”
Twist or break
A 2019 accident cost Kristian Lovell big. His summer changed. His employment status changed. His financial reality – and even future – changed.
To make matters worse, Kristian (42), was initially fobbed off by hospital staffers: it took one week and three visits to A&E before ‘minor twist’ was rightly upgraded to ‘shattered tibia’.
Unfortunately for Kristian, a support worker, he’d spent that week on his feet, hobbling through several excruciating shifts at a nursing home.
By the time his leg went into a hard-boot-cast, the ‘minor twist’ was almost a clean break - and he faced months out of action.
Statutory Sick Pay
For at least six weeks, Kristian would be completely immobile. As much as the simple things – such as sleeping, dressing and washing – would be a challenge, work would be impossible.
Mobility is a baseline requirement for a demanding job in elderly care. Even worse, Kristian’s employer – a small, non-profit organisation – didn’t have the resources to reallocate him, and he wasn’t entitled to sick pay.
Alarm bells rang as the Lovells realised one half of the household income was about to disappear completely. Kristian was eligible for just over £70 per week, then the UK’s standard Statutory Sick Pay (SSP).
As well as playing nurse for the next few months, Kristian’s wife – a manager in a hotel – also had to absorb a big financial burden: funding two lives on her salary.
Given Kristian’s contractual situation, any decent adviser would have recommended Income Protection.
Income Protection pays out between 70 and 80% of salary every month if the policy holder ever signed off work sick or injured. It continues paying out until the person returns to work, exits the job, or until the end of the policy term.
Payments begin after a pre-agreed deferment period. People generally choose a deferment period that coincides with their employer-sick-pay.
If you have six months or 90 days sick pay, it makes sense to have a corresponding deferment period. If you don’t have sick pay, you’d probably want IP payments to kick in immediately – hence the minimum deferment period is one week.
Income Protection exists to ensure people can avoid the stress of a sudden loss in income and largely maintain the lifestyle they’re used to.
Relying on one income wasn’t easy for the Lovell household. Like all of us, Kristian and his wife had obligations and debts; they had running costs; they had hobbies and interests and enjoyed a certain level of lifestyle.
Now with their combined income dropping by 50%, everything had to be reappraised. It was back-to-basics stuff; with all non-essentials struck off:
Sky TV: cancelled
Nights out: cancelled
The couple also had to shelve holiday plans and postpone a planned visit to see family elsewhere in the UK.
For almost four months, a low-key food regime of bulk buying and batch-cooking became the norm.
The cast coming off wasn’t the end of Kristian’s story. Several immobile months had taken their toll on Kristian’s muscle and he needed several lengthy rounds of physiotherapy. It was another four weeks before Kristian was risk-assessed and signed fit to return to work.
Given the lay time between working and getting paid, Kristian and his wife faced an extra period of scraping by before they could get financially back on top.
All in it was a six-month struggle. And while the couple managed to stay on top of their key overheads, their rent and utilities, Kristian fell behind in some of his credit obligations.
That means the aftershocks are still being felt to this day. Fourteen months on, Kristian is still working hard to repair damage done to his credit score - something he has to do if he and his wife are to, once again, start planning their future.
“Income Protection wasn’t on my radar in 2019,” says Kristian. “But having it would have saved us six months of hardship and struggle.
“Part of me is able to laugh that a dog and a seagull cost me my income. It makes a good story. But the reality was tough. We struggled to make ends meet and, in all honesty, I think it’ll be another year before we’re back where we were; able to see and plan the future we want.”
Income Protection vs CIC
18 Jan 2021
Stuck between Income Protection and Critical Illness Cover? Let us break it down for you.