What is Income Protection & Why you need it?

    In the very simplest terms Income Protection is a type of protection policy designed to protect your income. It provides an alternative income if you are unable to work due to injury or illness. This can give you financial security and peace of mind while you recover.

    We all have mortgage protection, car insurance, home insurance and travel insurance, to name but a few. But what pays for all these things? Your income. So why would you not consider protecting it.  

    Your income is your greatest asset. Without it the bills wouldn’t be paid, the mortgage wouldn’t be paid, the car wouldn’t be there. And there would be no luxuries like gym memberships or holidays. Without it your lifestyle would be financially impacted.

    It can be easy to take your income for granted. But have a think about what would happen if an illness or injury left you unable to work. Do you have a plan in place to provide an alternative source of income? Ask yourself:

    • How long would you receive payment from your employer?
    • Do you have savings you could use to sustain your lifestyle?
    • What ways can you reduce your outgoings?
    • Do you have additional bills e.g., medical that need to be taken care of?
    • Is there family you can ask for help?

    Negative Interest Rates

    The Challenge

    Deposit rates have been at all time lows for a sustained period and investors are starting to see the effects of this on their annual deposit return statements – which are showing zero!!

    At the same time we have seen the perfect storm with Covid where customers have been unable to spend on holidays, meals out and in physical retail stores. The graph below shows the net household deposits since 2004, in rolling 12 month periods. You can see that during the 2000’s there was a strong level of money being put on deposit and then following the financial crash this turned negative as people needed to access their cash deposits – the rainy day funds we so often speak about.

    However you can also see that up towards the end of 2020 we have had the most money deposited in any 12 month period we have on record.

    We have seen headlines and spoke about this “wall of money” on deposit for the last number of years and this figure of €100bn of household money on deposit has often been used. However this figure of €100bn has been well surpassed at this stage and the latest graph below demonstates how this has now hit €125 billion. There is also approximately another €20bn within Post Offices and State Savings Certs (whose rate of return is being cut also this week). This is a phenomenal amount of funds not working hard enough for your clients.

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