The news on Monday that Carillion – the UK’s biggest and best known facilities management and construction services company – had gone into compulsory liquidation came as a shock even to those that knew the company was in financial difficulties.
The fact that a London Stock Exchange listed company with a revenue of £5.214 billion in 2016* can go bust just two years later is a stark reminder that none of us know what the future holds. Even the biggest business can fail, and anyone can find themselves facing redundancy.
But if you can’t predict the future, you can at least give yourself some protection against the unexpected.
Income protection insurance
Bills don’t stop coming in if a salary does. Having a reserve of cash sitting in a bank could be a big help if you face the loss of a salary. But it is difficult to justify when the real value of savings is eaten away by inflation. What’s more, even the largest nest egg will shrink with disturbing rapidity if you call on it for living costs. Fortunately, you can get insurance cover which could provide the income you would need.
There are two main types of Income protection insurance.
The first, most basic cover is Permanent Health Insurance or PHI. This allows you to protect a portion of your income, often 50% of your salary. It pays in the event of illness or an accident that stops you working, and can continue until your normal retirement age.
The other is Accident, Sickness and Unemployment (ASU) cover, which can provide an income not just if you are unable to work because of injury or illness, but if you lost your job through no fault of your own
It will usually pay a proportion of your existing income for up to 12 months, which can be used to help cover your monthly outgoings while you find a new job.
The restrictions on ASU cover
Obviously, ASU cover comes with restrictions. The most important one is that if you have any reason to suspect that you might be about to lose your job you will not be able to take out an ASU policy. Those who will almost certainly be losing their jobs at Carillion will not be able to take out cover now.
Insurance companies investigate customers’ circumstances before authorising any payout. If you tried to insure yourself because redundancy was in the air you will probably find the policy would not pay.
Most ASU providers go even further and come with a waiting period of a couple of months before you can claim. There may be other restrictions. If you are over 65, self-employed or have been in your job for less than six months it may be difficult to get cover
Medical conditions may also be limited or excluded under your ASU policy. Back problems and conditions such as stress are likely to be excluded. Pre-existing medical conditions will also be excluded from your cover, and you’ll be required to declare these when taking out your ASU policy.
Arranging your protection
As Carillion has shown, protection against an uncertain future may be essential for all of us. Cover against redundancy can be an important part of the range of protection you need for real peace of mind.
At Continuum, we can find the answers when you want to protect yourself and your family. Our expertise covers all types of insurance products, and to get that expertise working for you, call us now on 0345 643 0770, or email us at [email protected]
*carillionplc.com – Annual Report and Accounts 2016