The failure of Britain’s oldest travel firm, Thomas Cook, at the beginning of the week has seen disruption and disappointment for thousands of holidaymakers.
With the biggest ever peacetime repatriation in full swing bringing 150,000 British holidaymakers home, most customers should not suffer too much monetary loss. Customers on a package holiday automatically have ATOL protection, paid for by industry levies, which will cover the cost of their holiday and flight home. It will provide a refund for those who have not yet flown.
Those with a flight only deal will need to call on their travel insurance company or credit card and debit card provider to seek a refund.
But the collapse of the 178 year old company is also said to have put 22,000 jobs at risk worldwide, including 9,000 in the UK.
The collapse of Thomas Cook shows that even established businesses can fail – and highlights the need for income protection.
What could income protection do?
The management of Thomas Cook blamed a series of issues for its failure, including unrest in Turkey and customers not travelling because of Brexit. Many industry observers believe the problem was actually the failure of the business to recognise the impact of the internet, online travel agents and low-cost airlines.
But whatever the cause, the collapse of a once profitable business should come as a warning for all of us who rely on a monthly salary coming in.
Many retailers have shut up shop for good. The collapse of Carillion last year showed that even government contracts are no protection against failure, and many of us can list financial institutions such as Barings Bank that are no longer trading. The point is that any employer can fail, and if you are an employee, you need to protect yourself and your family.
Short term Income protection is a type of insurance designed to help. It could provide a level of income for up to two years, to provide cover towards the mortgage, rent, monthly bills and groceries.
Most short-term Income Protection policies offer options of unemployment cover along with accident and sickness protection. They are designed to provide a monthly amount providing you are eligible to claim under the policy if your employer collapses or if you are made redundant, or if you become too ill to work. It is important that you ensure you meet the specific policy terms and conditions when you take out the cover and during the policy term, otherwise you may not be able to make a claim.
Do you need Income Protection?
Income Protection might seem like a good idea, but when you are on a tight budget you might be tempted to go without it.
At Continuum we usually recommend that you don’t give in to that particular temptation. The problems of a tight budget become very much tighter if you discover your next salary cheque is not coming in.
Look at your financial commitments each month. Bills, and a roof over your head, even if it is rented. A loan for a car perhaps. If you are buying, your home itself, and your investment in it could all be lost if you and can’t keep up the mortgage repayments.
What are the costs?
You need an individual answer tailored around your income; the higher your salary the more replacement income you will want. Getting the cover which fits your circumstances is easier if you have expert help.
At Continuum we arrange all round financial security for our clients, with a combination of policies tailored around your needs. Our experts can integrate Income Protection into a complete insurance safety net to protect you and your loved ones whatever life presents you with.
Businesses can and do fail. To make sure your plans for yourself and your family don’t fall with them, it makes sense to call us about Income protection today.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.