Following the advice in the last post, we now have some idea of the impact of the loss of our income due to either premature death or acute or chronic illness, we need to start working out how we’re going to protect ourselves.
Assess Your Current Cover
Chances are, we have some cover in place already. And the first place to start is with our workplace benefits. If you’re employed, and especially if you work for a big company or in the public sector, you’ll have some benefits available to you.
Start with life insurance, which is called ‘death in service cover’. Usually expressed as a multiple of your salary; find out how much you will get. Also, if your remuneration is made up of different parts, like basic salary, bonus, commission etc, find out what the multiple benefit is based on.
If it’s basic salary only, and it usually is, then take note of that. Some companies offer the option to choose higher level of benefits in return for a small monthly deduction from your pay, like a subsidised life insurance programme – definitely find out what is available to you so we can work with it in the next step.
Next, ask about sick pay. Specifically, you want to know how much you will be paid and for how long. Some public sector workers will get six months’ full pay followed by six months’ half pay for example. Smaller private companies may offer only a week’s sick pay. Again, write down the benefits available to you so we have them to hand. If you’re in a couple, do this for both of you, obviously.
Also, you may already have some personal policies in place. Now is where a really decent financial filing system would be handy. Hopefully you have records of what policies you have, how much they will pay out and on what risk? Are they policies which will pay out on just death, or on the diagnosis of a critical illness, or both?
Fill the Gaps
You should be able to get to the cheery point of knowing what would be paid out, and from where in the event of your death, being diagnosed with a so-called critical illness like cancer, or if you are just unable to work for any medical reason. Your next question is: Is that enough?
To answer that, you need to know a bit about the different kinds of policy available to you. In the next post, I’ll summarise the main types of cover available to you.
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