Whether you are an employee or a director of a company, there will be times when you feel that you don’t want to continue in your role and consider the option of resigning your position.
It goes without saying that resigning has a number of potential consequences attached to that decision, not least the prospect of finding another source of income by seeking out new employment or starting a new business.
There will be many different reasons and circumstances why you may consider offering your resignation and it is not a decision that you will take lightly when you consider some of the changes to your financial situation that this decision brings.
There are a number of options to consider and steps to follow if you are thinking about resigning and you can get some guidance on that, which might help.
What happens about income protection?
One of the most valued benefits offered to employees is income protection insurance, and savvy company directors are also well aware of the importance of having some sort of financial safety net that allows you to receive an income when you are not able to work.
Income protection is designed to provide financial support if you are unable to work as a result of having an accident, becoming too sick to work, or being made redundant.
There are two types of income protection cover that you would normally choose from:
- Level cover, which is when your premiums and the amount of pay out remain the same for the duration of the policy.
- Inflation-linked cover, which adjusts the premium and level of cover in line with inflation.
You can get income protection whether you are an employee, self-employed, or a director of a limited company. It usually allows you to cover up to about 80% of your income.
However, as you would expect, there are terms and conditions attached to the policy and before you can make a claim on your policy you would have to be sure that your circumstances are covered.
The big question is whether resigning will allow you to enjoy the income protection you need to maintain your financial status while you seek out a new opportunity.
You can read government guidance on the consequences of resigning when it comes to where you stand on claiming benefits and state support.
When it comes to claiming income protection, if you resign or accept voluntary unemployment it is unlikely that your income protection policy will offer cover for those scenarios.
A primary reason why you might consider taking out income protection in the first place is to use some financial prudence to cover your back if something unexpected happens that prevents you from earning your usual monthly wage.
You obviously can’t legislate against something unforeseen such as being involved in an accident or becoming too ill to work, which is what income protection is all about.
However, if you make a decision to terminate your source of income by resigning, your insurance cover cannot be expected to pay out, as this would be a situation that you had control over, to a certain extent.
Situations are not always that black and white, of course, and you may well have a perfectly valid reason why you need to tender your resignation.
Do your research
If you are someone who wants to enjoy the peace of mind that comes with knowing that you have taken the right steps to protect your financial future by covering all angles of investment and insurance, income protection will clearly be on your radar.
Every person’s circumstances will be different and that means you need to find a policy that is the best fit for your needs and personal situation.
A good way of reducing the risk of a rejected income protection claim is to do your own due diligence in terms of getting professional guidance on the right policy in the first place. It is also important to check the policy wording and clarify what is covered if you are unable to work.
Payment protection is a very useful insurance cover to have in place. Once you have that sort of peace of mind, it makes sense to understand when you can rely on it to keep your finances afloat, and when it won’t support you.
If you are thinking about resigning, for whatever reason, it makes sense to have a backup plan.
Get in touch today to talk about your income protection options.