An income can be defined as the money that you receive for the services or the goods that you have supplied. If you have been working, then you know the importance of your income. Your salary will keep you afloat and alive, especially if you are independent and living on your own. Your income is not just important for the material value it gives, but also for the sense of satisfaction that you are able to provide for yourself. Although there are a lot of jobs out there, wherein some even have two to three jobs, a lot of people still lose their incomes without knowing how. It can be through bad investments, bad people or even bad management. If you value your income because you value the hard work that you have put into it, then you need to read on to see how you can protect your income.
Retirement Income: How to Save Up and Protect
If you are not already aware, there is something called your retirement income. It is actually the amount that you would most likely need in order to be able to pay for your medicines and bills while you are in your retirement. People usually save up for their retirement income by investing their money in insurance and retirement plans, social security, pensions, savings accounts, mutual funds and home equity. One very dangerous situation that usually happens is when retired people do not get the retirement income that they worked and saved up so hard for.
If you would ask how to protect your retirement income, the best way of course is to do a lot of research. That means very thorough studying of different retirement plans and insurance, before making an investment. You need to make sure that the company you are leaving your money with will come through for you when the time comes for you to retire. Remember, you are entrusting your retired life to these people, so be sure to do every possible background checks. Now, if you think this is all too hard for you to handle, it is best to consult with a friend who has had experience, or better yet, a professional who can walk you through the process.
Income From Stocks: Preventing Loss
So many people have been investing in stocks nowadays. In fact, it is not just the financial experts that are going into the stock market. Even people who are not in anyway associated with the stock exchange have been venturing into this industry that is not even new but has been blooming for the past couple of years. But there have been signs that the stock market imposes trouble for those who are relying on their stock investments to pay for their income and pensions. Experts have shown that there will be what they call a black hole with the way the payouts are being computed. One of the reasons behind this is that there is a possibility that major British firms will be bought by its rivals.
A lot of people who have been saving and investing in the British Stock Market have shelled out almost £59billion. And the truth is, most of these investors tend to give their money to companies with reputations of being able to give back huge amounts of money to its stockholders. Experts have been observing that during the course of the past five years, there was a 98 percent of average equity income returned by the fund manager. But because the Pound is still very strong, the returns will be squeezed, including the living standards of the investors who are relying on them.
So if you are very interested in buying stocks to help you in your future but are afraid to see your money go down the drain, the best thing to do before investing is to check the dividend cover. This is where the company’s profits are much more than the dividend payment. Experts have shared tips on how you can spare yourself from losing money and that is to avoid buying shares that are 1.5 below what they call the safety threshold. These shares have profits that are 1.5 times more than the latest dividend payout. So if you invest in one of these shares and their stocks decide to suspend or even cut dividends, you will lose a lot of money and your income will be depleted.
Regular Employment Income: Regular Ways to Save
So aside from the first two income generators, there is also the most common income and that is the money coming from your regular or day jobs. Now, you would know the importance of budgeting your hard earned money because you worked for it. So of course, you would want to do everything you can, not to waste money. The best thing to do for you to protect your income is look for the best rates that a bank can offer, so you can save your income. Be sure to know how to budget your income, setting aside money for all your necessities, some for savings and a little bit to have fun. If you deprive yourself from having fun, you will end up binging and losing more money.
Income Protection Insurance: Knowing the Importance
Although budgeting and storing up money in the bank, there is an even better way to make sure that your income is protected. That is by getting an income protection insurance. Income Protection or IP is an insurance policy devised to give you income whenever you cannot come to work because of an illness or an injury.
Originally known as the Permanent Health Insurance or the PHI, the IP usually gives payments until you return to work, retirement and even death. IPs are usually long-term, but there are now short-term policies that are being offered at a cheaper price. Although it is important to have payment protection insurance and private medical insurance, it is still safer to have your own IP because the policies are made specifically for preventing income loss.
To be more specific about the importance of having an IP, Unum and Personnel Today have conducted research that shows only 12% of employers actually pay their staff for more than one year if their employees have been out sick. Because of the low level of availability of these state benefits, every working adult in the UK should definitely consider having IP. The researchers said that out of all the people they asked, only 9% have IP, while 41% have life insurance. What is very alarming though is that, from one survey, less than a quarter of people believed that income protection is important.
Types of Income Protection
The long-term income protection policy will pay you out until a specific maximum age, death or until you are able to go back to work. By the time you apply for your policy, you will find out what your coverage is from day one, so you will know what you are allowed to claim for.
The short-term IP is similar to the long-term one in terms of policies and coverage, except for the part that short-term IPs only have a maximum of five years.
- Accident, Sickness and Unemployment (ASU) Cover
This type of income protection comes at a more filtered process, as providers need to screen clients. This coverage is a bit cheaper than regular IPs, but there is less guarantee of what you will be covered of.
Price Bases of Income Protection
Having a guaranteed price bays will ensure you that you will pay for the same amount until your policy term expires. The amount will only increase if you upgrade your coverage. Although this will cost you more in the beginning, it will help you save money in the long run.
After a specific period of time, your premium gets reviewed, at which point, your insurance provider is allowed to increase the amount that you are already paying for.
If you have a high-risk job or you are a smoker, then this could be the best price base for you because risk factors aren’t part of the price computation. However, you can expect your bill to rise every year as you grow older.