No CI cover could damage pension pot, says L&G
Legal & General is urging people to consider the impact that having a critical illness could have on their ability to save into their pension.
The life and pensions company estimates that someone aged 30 would need to save £292 per month in order to live comfortably in retirement.
However, if the same person were to delay paying into a pension for 10 years as a result of a critical illness and drop in income, they would have to save £635 a month to achieve an equivalent pension.
Illness can have a serious impact on finances over both the short term, and much more importantly, the long term.
Proceeds from Critical Illness policies could be used to make regular payments into a pension plan. For a 30 year old at £292 gross a month, an average Critical Illness Policy payout of £60,000 would provide two years worth of monthly pension savings and still leave over £50,000.
It’s well documented that many people do not save enough for their retirement. However, if you are unfortunate enough to suffer a critical illness then you may never get your pension plan back on track.
The earlier in your career you take out a policy, the cheaper it is and you can protect your most important years in terms of savings capacity.
admin @ October 15, 2008