The most important policy you could have is for YOU

Independent financial advisor Simon Gibbons writes about what is probably the most valuable policy you’ll ever have...

THE majority of us are very sensible and insure at the very least our home and car. Many insure pets, gas boiler, the pipes leading to the property and even the plants in the garden.

Now imagine that you had a machine that sat in the corner of your living room and steadily printed genuine, legal tender £20 notes. Would you insure that machine against the possibility of mechanical failure? I’m guessing that most of you would.

Well, you have a machine like that – it’s called you. Every month you go out to work and come back with £20 notes nicely produced and either in your pocket or deposited straight into your bank account. Have you got yourself insured against ‘mechanical failure’ through either sickness or accident?

For the greater percentage of the population the answer is no, meaning in most cases that you and your family will have to rely on state help, with Statutory Sick Pay currently being £81.60 per week. If that’s not likely to be enough to live on, you could consider an Income Protection policy as your own insurance against mechanical failure and not being able to work through sickness or accident.

Typically, a 35-year-old male could insure themselves to the age 65 for between £25 and £30 per month. This is to provide an annual income of £18,000 and means that should the insured be unable to work through sickness or accident then the plan would pay an income of £18,000 (this is a net figure as no income tax is levied) either until they are well enough to return to work or reach the age of 65. I think that’s very good value and could certainly make the difference between being able to meet the bills and not.

These plans can be quite complex with the different types and options, each of which depends upon individual circumstances, so please seek advice before going ahead with anything.