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Tuesday, 07 July 2015

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Are your finances covered for every eventuality?

If you or a member of your household fell ill, or had an accident and were unable to work, what impact would it have on your finances?

It’s possible to estimate how your spending patterns might need to change if this happened, but have you considered the real effects and what you may need to give up?

Household income

Your household income could drop if the person who fell ill is employed or self-employed, particularly if they are the main income earner in the household.

If they are employed, they may be entitled to sick pay from their employer for some time, or if not, they may receive statutory sick pay, but this may be significantly less than they’re used to.

Once these run out, if they are self-employed, they may have to rely on state benefits, although they may take some time to secure. It may be necessary to use savings to make ends meet.

A longer term illness could result in household income falling drastically, and there is a strong likelihood that you would miss out on any overtime, bonuses, or commission you usually earn.

Household bills

These may increase sharply if you spend more time at home due to illness. Your gas, electricity and other domestic bills might be higher, especially during cold weather.

Food costs could also rise and the amount you spend on prescriptions and medication might also increase, although you can buy pre-payment certificates to cap costs.


If the person who falls ill no longer has to travel to work these costs will go down, but there may be extra costs or inconvenience if they can’t drive.

Financial products

Some payments still have to be made even if you are ill, such as mortgage and loan repayments and although you may have insurance to cover these, you will still have to pay for things such as home and car insurance. With other financial products, such as life insurance, critical illness cover and personal pensions, check if you have waiver of premium cover.


If the person who falls ill provides childcare, this may need to be replaced by a child minder, nursery place or after-school club and the cost can be substantial. According to the Daycare Trust, the average yearly expenditure for 25 hours nursery care per week for a child under two was £5,028 in England in 2011.


One of the most effective ways of preserving your income is to arrange insurance which pays out in the event of illness or disability.

Illness can occur at any time to anybody, so whether you’re employed or self employed I strongly recommend that you consider the impact of illness upon your finances and seek suitable advice.

  • For independent financial planning advice call Armstrong Watson on freephone 0800 195 2161 or email moneytalk@armstrongwatson.co.uk.
  • Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Services Authority. Firm reference number 542122. Registered as a limited company in England and Wales No. 7208672. Registered office: 15 Victoria Place, Carlisle CA1 1EW Armstrong Watson Financial Planning & Wealth Management is a trading name of Armstrong Watson Financial Planning Limited.


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