If you were to suddenly become permanently unable to work for any length of time, how would you cope financially? It is a scary prospect for anyone. The good news is that, with some planning and sensible precautions, anyone can protect their finances in case they cannot work. These situations can be highly stressful, but with the proper knowledge and advice, you can rest assured that your financial future is secure.
Critical Illness Cover
Critical illness cover is designed for people concerned about the impact that a long-term illness or disability may have on their finances. A critical illness policy pays out a lump sum if you are diagnosed with one of several specified illnesses – many of which are conditions that can be long-term or have a significant impact on your ability to work. It would typically cover things like long-term illness, disability, or the loss of a significant bodily function, e.g., loss of sight or a limb. Some policies may also cover things like the loss of a parent or the death of a spouse or partner – this would depend on the circumstances and the policy you take out. This can be particularly helpful if you are the primary breadwinner in the family – and would be responsible for paying the mortgage, bills, and taking care of any children.
Have An Emergency Fund
An emergency fund allows you to deal with unforeseen events or expenses that may arise, such as a sudden loss of earnings, a medical emergency, or a home repair. Having a fund to fall back on will help you to cope with any financial problems that arise and will mean that you do not have to rely on credit cards or loans to bridge the gap. You can set the amount you want to contribute each month to an account you can access whenever you need. This can help with any living costs in the absence of income or support out-of-pocket expenses such as finding an AFFF attorney to make a claim regarding your illness.
Debt Protection Insurance
Debt protection insurance plans are designed to help protect your assets from being seized if you cannot pay your debts. Even if you do not think you have a lot of debt, you may be surprised at how quickly things can spiral out of control. And if you are unfortunate enough to fall ill and need to take time off work, your finances could be at risk. Plans like this will typically pay out a certain amount if you cannot pay off your creditors due to an accident or illness. Typically, they also pay out a reduced amount on any ongoing debts. This will help protect your assets and future finances against lawsuits being filed against you because you cannot pay your bills.
Look Into Income Protection
While critical illness cover aims to replace some of your income should you become ill, income protection is designed to replace your income should you become sick and unable to work for an extended period. With income protection, you pay a monthly or yearly amount; should you become unable to work, you will be paid out by the insurance company. Typically, you will be paid a percentage of what you previously earned. It is important to note that different providers have different definitions of long-term illness, so it is best to check the terms of your policy to see your situation in the event that you cannot work.
Planning ahead is key to protecting your finances if you cannot work. Start saving as early as possible, and be sure to take full advantage of all the tax reliefs available. It is also essential to consider the types of insurance best suited to your circumstances and future goals.
This is a collaborative post.