Enjoy the good times. Be ready for the worst.

Tony Ashton | 27 February 2017

Rainy days are few and far between in the UAE, but it doesn’t mean there aren’t any clouds on the horizon.

Every once-in-a-while, it’s a good idea to take stock of your financial situation and ask yourself, if you lost your job tomorrow, could you cope? By building up a cash emergency fund of three to six months’ salary, you are effectively giving yourself a buffer zone to cover your bills should the worst happen, such as job termination or loss of earnings in the family.

The beauty of an emergency fund is that you may also never need it. In which case, it’s a great way of building up your savings too.

 

So where should you stash your emergency cash?

Definitely not under the mattress. Aside from being an accelerant should a house fire occur, home insurance policies in the UAE don’t tend to cover lost or stolen cash, because there’s no documentation proof.  

Globaleye’s Senior Wealth Manager Tony Ashton recommends parking your emergency fund in an instant access current or deposit bank account. That way it remains liquid should you require your cash immediately.

It’s also worth investing in Income Protection Insurance, suggests Ashton. “This will pay you a monthly income should you be unable to continue working due to ill health.”

If you’re not sure whether Income Protection is a suitable product for you, it’s worth asking yourself if you’d struggle to make ends meet if you suddenly lost your salary? If you have dependents, would you be able to continue meeting their basic needs without your income?

 

The cost of peace-of-mind

Knowing you and your loved ones are financially protected, should ill health temporarily rob you of your income is priceless. But not expensive. In fact it’s thought income protection is a favourable option because it generally generates a maximum of 70% of your gross monthly earnings, depending on the policy you choose.  

However, the importance of having a liquid emergency cash fund is once again highlighted as a necessity. “Most income protection policies have a ‘waiting period’ before you can claim – usually 90 to 180 days – therefore it’s important to have your emergency fund in place to cover this time period,” warns Ashton.

 

Get your guide to personal protection below.

 

Alternatively, speak to Tony or one of the team to learn more about the options available to you. 

Tags: Savings insurance income protection

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