Matthew and Jessica — Protection Case Study
Matthew and Jessica are both 35 and have two children, aged 5 and 3. Matthew works full time as an HGV driver and Jessica is a solicitor working three days a week. They have recently bought a new home together and have been enjoying spending time with their children and redecorating the house. However, Matthew has sustained a knee injury whilst playing football which has put their plans in jeopardy.
Due to the nature of his job, Matthew can’t drive whilst his knee is injured so he’s had to take time off work. He works for a small company and he knows that the firm’s finances are tight. His employer has provided him with full pay for the first two weeks but has said that he will now need to move to statutory sick pay. This will provide Matthew with £96.35 per week which is less than a quarter of what he usually earns.
Unfortunately, the bad news just gets worse, as Matthew is told he is going to need surgery on his knee. He could be waiting up to 6 weeks for the surgery and it might be another 6 months before he is able to drive again. He won’t be able to work during this time and will have limited mobility.
Matthew and Jessica’s savings are currently low as they used nearly all their money to buy their dream home. Their mortgage is manageable with two salaries, but they aren’t sure how they will afford it with only Jessica working. Although Jessica could potentially increase her hours, Matthews not in a position to run round looking after the children, so they would need to increase their childcare (which in turn will increase the cost).
Luckily, when they took out their mortgage, they undertook a full review of their protection needs with their financial planner. They identified that they may have a problem if Matthew was unable to work and put in place an income protection plan. The plan had a deferred period of 4 weeks and covered 75% of Matthew’s salary.
This meant that once Matthew had been off work for four weeks, he was able to begin receiving payments from his insurance company. He would receive a regular tax-free income of 75% of his salary until he was able to return to work again.
Having an income protection plan in place gave Matthew and Jessica financial security when they needed it most. Knowing that they would continue to receive a regular income until Matthew was able to return to work gave them peace of mind as they knew that they could meet their mortgage payments and continue to live their current lifestyle. This meant Matthew was able to concentrate on healing without worrying about money, and Jessica didn’t have to increase her hours.
If you would like to review your personal finances, including your protection needs, you can book a free initial consultation from our website www.thefuturefp.com
