Having policies in place to replace your monthly income, as well as protecting your mortgage repayments, must surely be the top priority - the outlay is miniscule compared to the return should you need to claim. And the odds of an insurance payout are far greater than winning the lottery or beating the bookie.
Braintree, Essex (PRWEB) July 23, 2008
As the number of people claiming unemployment benefit continues to grow - a further 15,500 'signed on' in June - and inflation at 3.8% is the highest for a decade, Simon Burgess from British Insurance urges consumers to invest in a policy that provides a monthly income to meet bills, should they lose their job.
The independent Payment Protection Insurance provider says a policy costing £25 per month provides a tax free monthly income of £1000. Premiums over a year equal £300, which Burgess believes is a small price to pay, given the monthly payout of £1000. He comments: "If a person only claimed on the policy for one month, that single payout would exceed three years premium payments, so it more than pays for itself."
Whilst Burgess believes this is a 'no brainer' and a simple way to maintain a lifestyle in the face of adversity, consumers don't see it this way. According to the Office of National Statistics latest Family Spending Survey*, income protection isn't even on the horizon when it comes to the top 50 categories of household expenditure. A view shared by the Association of British Insurers** who believes less than two per cent of households have this type of cover.
The 2007 Family Survey indicates homeowners are more likely to gamble than protect their income. Gambling payments were ranked number 33, ahead of purchasing fresh vegetables and fruit (34 and 42), holidays abroad and in the UK (37and 46), plus pets and their food (36). The top three items of expenditure were mortgage interest payments, rent and fuel.
Some would argue gambling is a form of 'income protection' but Burgess believes that as the recession deepens, consumers must take their financial responsibilities seriously and put a safety net in place.
"I suspect spending patterns are changing due to economic pressures, however, it's disturbing to learn that people are happy to leave their finances to chance rather than proactively manage them."
Recent reports of job losses and rising bills include; news that the 15,500 increase to 840,100 claiming unemployment benefit is the biggest jump since December 1992, house builders have collectively made 2000 redundant and fears are rising for job security in the retail sector. The Financial Services sector also announced 650 redundancies and fuel bills are expected to top £1000 per year early in the next decade.
Burgess concludes: "Having policies in place to replace your monthly income, as well as protecting your mortgage repayments, must surely be the top priority - the outlay is miniscule compared to the return should you need to claim. And the odds of an insurance payout are far greater than winning the lottery or beating the bookie."