Business

Protect yourself - or you could be closer to the breadline than you think

The UK’s first 'food waste supermarket' at Pudsey
The UK’s first 'food waste supermarket' at Pudsey The UK’s first 'food waste supermarket' at Pudsey

Not many of us will have heard of a town named Pudsey, near Leeds. However, it has been in the news in the last week for a very particular reason.

Pudsey has become the site of the UK’s first “food waste supermarket”, a concept already well established in Denmark. Food waste campaigners from the Real Junk Food Project have opened "The Warehouse" to offer cheap food to families in need. Customers are invited to shop for food thrown out by supermarkets and other businesses.

Regular readers will know that, following David Cameron’s decade of austerity, last year was the year when we coined the phrase ‘Jams’ to describe the many thousands of families in the UK who are ‘just about managing’.

The food in the Pudsey supermarket is priced on a "pay as you feel" basis and has already helped desperate families struggling to feed their children.

Many such families end up in dire need, due to losing the household’s main income.

However, we are not well prepared for an unexpected event that suddenly cuts our monthly budget by half, or even more. In their most recent “Deadline to the Breadline” report, Legal & General showed just how ill-prepared we are for losing our income through accident, illness or redundancy.

The latest edition shows that on average we have savings that will last just 29 days, if we are suddenly unable to work. This means that in just over four weeks after losing our job, or otherwise being rendered unable to work, many of us will most likely be reliant upon sick pay or state benefits for financial support.

If we are hit by a critical illness, standard sickness benefit from our employer is just £88.45 per week, and is payable for the first 28 weeks only.

Ironically, we appear to be well aware of the possibility of having to give up work through long term illness.

Not long ago, Aviva did a survey that revealed that, when we think of our personal health, over half of us worry about being diagnosed with cancer, a third of us worry about heart disease, and a third of us worry about having a stroke.

Women are particularly worried about cancer, as breast cancer is the most common form of the disease.

It’s clear, then, that most people do worry about serious health setbacks.

However, we would appear to be complacent about insuring ourselves against such events: Aviva’s report revealed that just 16 per cent of us have taken out insurance to protect ourselves against an unexpected major health problem or injury. That’s less than one in five of us, despite the fact that the figures show serious illness is likely to hit a quarter of men, and a fifth of women during our working life.

This situation persists even though we have a reasonably high awareness that the relevant insurance to protect us financially in these situations is critical illness insurance (CI).

CI pays out an agreed, tax-free lump sum if you are struck by one of the health conditions covered by the policy. However, policies differ and the guidance of an independent financial adviser is essential, to make sure you end up with the policy that is right for you.

Another way of insuring your income is Income Protection Insurance, or IPI. This is designed to provide a replacement income in the event that you are forced out of work due to a long-term illness, and it pays out alongside other benefits you may receive.

If the opening of the UK’s first food waste supermarket in Pudsey has anything to tell us, it is that many families find themselves facing financial hardship in these troubled times.

Insuring yourself with CI or IPI can at least reduce the probability that you will fall on hard times, if a health setback were to strike.

:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005