By Naomi Tudor
Your biggest asset is your ability to earn an income. I talk about this a lot because I’m passionate about ensuring you have the right foundations in place for peace of mind and financial security.
If you couldn’t work tomorrow because of injury or ill health, how long would your financial resources last? Would you want to end up reliant on government support? It’s not a lifestyle I’d want and it’s not a lifestyle of choice for most people.
There is a perception that protecting your income is expensive. However, there are many permutations to creating tailored insurance cover that will fit your needs and your budget.
Three ways you can get your income protected and save money include:
Just as you can opt for a combination of fixed and variable rate home loans, it’s not an either / or these days in choosing stepped or level premiums. Cover can be tailored so that you combine the benefits of level premium (that are consistent over time so you can avoid the additional cost in later life when you’re more likely to claim) with the cost conscious stepped premium option.
The longer the waiting period, the lower the premium. However, with a longer waiting period, the more reserve cash you’ll need to cover your bills between the start of your injury or illness and the first claim payment.
The shorter the benefit period, the lower the premium. However, depending on the nature of the illness or injury, you may need to be on claim for a period longer than the benefit period.
Most insurers offer discounts for paying premiums annually. A key issue here is to know that you have the funds available each year at policy anniversary. This is a great cost saver for those who are good at budgeting or generally have available cash reserves. If you’re going to pay by credit card and then spend 12 months paying it off, this is NOT a cheaper option.
Naomi Rosenthal is a financial planning expert at Tudor Investassure who empowers women to plan, implement and manage their financial resources to create financial security and peace of mind.
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