Income Protection for Tradesmen
18 May 2020
Only about a third of families in the United Kingdom have any savings, and less than a third of families have any life insurance or income protection products to cover them in a crisis. This leaves almost a third of the families in the UK unprotected if something were to happen to their bread-winner. To add just a little bit more gloom and doom to the mix, an estimated 141.4 million work days were lost to illness or injury in 2018. We’re not just talking about your coworker who took five days off last year for a tummy bug or a spot of the sniffles either.
That’s a whole lot of financial stress and uncertainty, especially if you’re self-employed or run your own business. If you’re a tradesman, you could be hit particularly hard - especially as the nature of your job means you’re at a higher risk of injury than someone who sits all day in a comfy office chair. If you rely on being fit and healthy to do your job, then getting sick or injured could be really detrimental to you.
If only there was a way you could shield yourself from the money worries that would hit you if you did have to take time off sick.
Oh, wait. There is. Income protection. It’s probably one of the most important insurance policies out there, but also really under-appreciated as many people don’t really understand how it works and what it could do for them. If you’re one of them, let us break it down a bit for you.
What is Income Protection and how does it work?
Income protection pretty much does what it says on the tin. It’s designed to replace your income if you can’t work, so you’re paid a percentage of your salary every month to tide you over until you’re fit as a fiddle once again. The percentage of your salary you’ll receive - usually between 50-70% - is decided when you buy your policy, along with the length of the deferral period.
The cost of your premiums will depend on what you’d like to cover yourself for, your age, health, job, and lifestyle, as well as the amount you’d like to receive monthly after making a claim and the length of your deferral period.
The deferral period is a pre-agreed period of time in between making your claim and receiving your pay out. The longer your deferral period is, the cheaper your monthly premiums are likely to be. If you’ve got a lot of money in savings or family members who can help you lighten the load then you could probably set a longer deferral period. It’s also worth checking if you qualify for Statutory Sick Pay (SSP). Most employed people will qualify for Statutory Sick Pay (SSP) which entitles you to £94.25 a week, paid for up to 28 weeks.
You’ll continue to be paid until one of the following happens:
- You’re declared fit and healthy enough to go back to work
- Your policy expires
- You retire
- You pass away.
You can claim as often as you need to until the policy comes to an end.
Why is income protection so important for tradesmen?
In previous years, up to 70% of income protection claimants have been tradesmen. When you’re in a job that often relies on you being in good physical health, it’s so much harder to continue working with an illness or injury.
If someone with an office job suffered a back injury or loss of a limb, it’s likely that they would need little or no time away from work. But if a builder or carpenter suffers a muscle or skeletal injury, it’s likely to make it difficult for them to carry out their duties until they’ve recovered or rehabilitated. In 2018 more than 30% of income protection claims were made for musculoskeletal accidents and fractures.
Simply put - tradespeople are at a higher risk, so could be in greater need of protection.
Do I need income protection if I’m self-employed?
If you’re a self-employed tradesman or woman, it’s almost like being doubly at risk. You’re already at higher risk of injury - and therefore at higher risk of being unable to work, and if you’re self-employed there’s no safety net if you need time off of work. It’s wise to include income protection in your business plan. Your monthly income will be based on whatever your share of pre-tax profits from your business are.
If you need help figuring things out further, don’t hesitate to contact us here at LifeSearch. We’re here to support you through choosing your life insurance policy, no matter your situation. We’re not about ‘selling’ you anything... we’re here to make sure you get what you need. We’ll take your personal circumstances into account and do our best to recommend the most suitable policies for you and your family.
Talk to one of our experts now, on 0800 316 7253, and we’ll find the best policies for you, no matter your situation.
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