We all look to take out the insurances that we know we need, such as car and home insurance. But as a single woman you may be neglecting to insure your biggest asset. YOU!
As a woman on your own, what happens if you are off work through sickness or accident for any prolonged period of time? What happens if you are diagnosed with a critical illness? Life as a single woman is full of potential and more and more women are experiencing how good life can be lived independently and in the moment. But we also need to plan as we play, particularly if we are single. We think these situations won’t happen but we can’t predict whether or not we will fall ill in the future and we do need to think what that might mean. If you have no income coming in or very little savings to fall back on, how are the bills going to be paid?
It’s always good to have a plan. First, make sure you have an emergency fund in the bank to fall back on for any unexpected event. In an ideal world we would recommend between three to six months’ worth of salary.
Second, consider what would happen if you were unable to work for a prolonged period of time.
If you are employed, make sure you know your company’s sickness policy. How long will they pay your full salary, after what term will it reduce and how long for? Will you be entitled to statutory sick pay only? Statutory sick pay kicks in after 4 days of being sick and pays for up to 28 weeks. After this period, you’re on your own.
If you’re self-employed, what would happen? Unless you have an insurance policy to provide income in the event of being unable to work through accident or sickness, your income would either reduce or stop all together.
Whatever your employment status, an income protection plan could provide you with peace of mind that an income would be paid to you until you are able to return to work, at the end of a fixed term or up until your chosen retirement date.
The diagnosis of critical illness can be overwhelming, with a lot to take in emotionally and on a practical level. Having a financial buffer can help. While an income protection plan can provide a source of income, a critical illness plan will pay out a lump sum on diagnosis. The three most common claims under a critical illness plan are cancer at 62%, heart attack at 12% and stroke at 8% (source: Financial Adviser).
Having a lump sum payout could pay for valuable treatment or changes to your lifestyle that may need to be made. With increasing survival rates, a lump sum payout could change your quality of life. Your life and the way you work may be changed by your illness. You may want to grasp opportunities you had put on the back burner. You may not wish to be doing your 9 to 5 job anymore. Having a lump sum payout could enable you to start your own business, do all those things that you thought you would have to wait to do in retirement, clear your mortgage and the list goes on.
Everyone could benefit from a financial review to sit down and go through what issues are important to them in their life ensuring that you are protected against the unexpected, and planning for your future going forward.
From my own personal experience, a critical illness payout made an important difference to my life. Having financial security and money to play with can open up options at a difficult time.
Single women and financial planning for illness: top tips
- Keep an emergency fund of 3 – 6 months’ salary in your bank account if possible
- Know your company’s sick pay policy – statutory sick pay is up to 28 weeks and then you are by yourself
- Consider both an income protection plan and a critical illness plan
- Get financial planning advice from an Independent Financial Adviser such as Sarah
Sarah works for IEP Financial at Hove. IEP offers an initial meeting at IEP’s cost to get to know you and what your needs are in terms of what you want from your life and how IEP can help get you there. Sarah can be contacted on 01273 208813 or email firstname.lastname@example.org.
IEP Financial Limited are Authorised and Regulated by the Financial Conduct Authority (FCA).