Can you tell me about income replacement cover?

Brian McCarthy talks us through income replacement cover and the benefits that it offers ...

Most people depend on their income to meet their daily needs and to pay bills, such as mortgage repayments, school fees and fuel costs. In the event of long term absence from work due to accident or illness, this can become a big problem as income will cease sooner or later but the bills are still required to be paid.

Find out your current sick pay entitlement

Most employees will receive an element of continuing salary in the event of absence from work due to accident or sickness and this varies markedly depending on the employer. It can be as short as a few weeks, or six months at full pay followed by six months at half pay for public sector employees, depending on their years of service.

We at ESPC recommend that clients firstly establish what their entitlement to sick pay is and then consider the impact on their lifestlye, should income suddenly cease. Personal long term income protection can be arranged at modest cost to ensure an on-going income which will continue until return to work or retirement in the worst case scenario.

Protect your income 2

Individual tailored requirements

Benefits can be tailored to a client's requriements and the monthly income provided is payable tax free under current legislation. Benefits can be paid to dovetail in with employer sick pay arrangements and there are a number of features and options to provide maximum flexibility, such as index linking.

The situation for self-employed people is even more pressing as they will not receive sick pay benefits and their income would virtually cease immediately apart from very limited short term state benefits.

In summary, clients should consider how they would cope in the event of long term absence from work and loss of income. Speak to us at ESPC Mortgages to disucss the options available to you.

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Brian McCarthy is a Financial Planning Consultant who aims to help those who need help finding mortgage solutions. You can call him on 07956 969 859 for more information.

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The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.