In conjunction with the online publication of “Managing Your Money” – a non fiction book offering advice on how to manage money – this article brought to you by HowTo.co.uk looks into some of the ways you can better your money management.
Financial disaster is something that can quite easily happen if not planned for. Are your family provided for should something unfortunate happen to you? Do you have a retirement plan? These crucial questions you need to ask yourself when it comes to managing money and if you are serious about protecting not only yourself, but your family. After all, if you fail to plan, you plan to fail.
Protecting your dependants if you die
Some pension schemes offer a benefit if you die whilst still working. If you are not a member of such a scheme, you may need to consider some sort of life assurance. There are normally 3 types:
Term – This is the cheapest form as it is for a limited period only. An example is a mortgage protection policy, which is for the life of the mortgage only. If it is a repayment mortgage it only need be on a reducing balance basis – as the mortgage is repaid – the cheapest form of all.
Whole-Life – This pays out when you die and so is more expensive. There will always be a cash-in value and the policy can be used as security against a loan.
Endowment – This usually arises in connection with mortgage repayment and it includes life cover. It is no longer thought to be a good way of saving to pay off a mortgage because of high charges and the risk that there will be a shortfall.
Incapacity
You can receive incapacity benefit from the state, but is this really enough? Here are the different types available:
Sick Pay – Your employer pays you statutory sick pay but this only lasts for 6 months and the maximum amount at the moment is £62.20.
Incapacity Benefit – You can receive incapacity benefit which is tax free but subject to a medical check. However, you will be unable to receive this benefit if you are receiving sick pay or are able t do any work.
Housing Costs – The state can give you help with your mortgage payments and other housing costs if you are out of work. However, you must be eligible for Income Support, which means a low income and savings of less than £8,000.
Sickness Insurance – Your employer may be able to cover at a higher level than the maximum and for a longer period. If not, your trade union might have such a policy.
You may also consider insurance to cover sickness.
Credit Insurance – Credit insurance covers the risk of not being able to pay the interest on a loan in the event of loss of income due to disability, illness or redundancy, as well as death. Unless you have savings, it’s something you need to consider.
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