After a separation, many experience increased financial responsibility. When you have to pay for a household yourself, your income suddenly becomes absolutely crucial for your and the children's security. There are ways of protecting yourself if you become unemployed or ill. In this article, Magnus Hjelmér everyday economist ICA Banken, gives his best tips on how to protect your income in unforseen situations. Summary of 'How to secure your income after separation' below.
First of all, I would like to advise you to join an unemployment insurance fund. It gives you the opportunity for a basic allowance if you lose your job. The maximum amount is SEK 26,400 / month before tax (level 2023) during the first 100 days of compensation and then decreases. If you earn more than that, it may be time to fix income insurance. It serves as a complement to the unemployment insurance fund and allows you to receive up to 80 percent of your salary in compensation for a number of months if you are laid off.
If you join a trade union, income insurance is usually included, but you can also take one out on the side if you are not member of a union. It is common for income insurance to have a waiting period, so you need to have had it for a certain period of time before you become unemployed for it to apply.
Do you have income insurance? Then remember to update your salary every time it changes!
If you have a collective agreement at work and become ill long-term, you are in most cases entitled to compensation equal to 90 percent of your income. Since the agreements differ, it is important that you find out what applies to you – before you get sick. If you are not part of a collective agreement, it is of course even more important, so that you do not risk being completely without compensation.
On the website Ersättningskollen you can calculate what your compensation would be.
If you want to improve security, health insurance is an option. If you become ill long-term, a month's amount is paid out as a supplement to the compensation you receive from the InsuranceFund. There are several parties that offer health insurance: your employer, the union or privately through insurance companies. Sometimes health insurance can be included in income insurance, so make sure you don't double insure.
Another way to secure personal finances is to insure the cost of borrowing. A loan protection is either linked directly to a loan, or insures a certain amount. In most cases, loan protection provides compensation in the event of involuntary unemployment and long-term illness. When it comes to mortgage protection, the insurance pays all or part of the loan. There is often a waiting period linked to unemployment that usually lasts between 150 and 180 days.
If you have large borrowing costs, it can become a problem in case of unemployment or illness. Then it can be nice to feel that you are not also forced to move, since this will add pressure on you and your children. Just keep in mind that the monthly cost of loan protection can be expensive, especially when interest rates are high.
Your buffer savings are invaluable when you face unexpected costs, such as if you were to take sick leave or lose your job. Even if you have one or more of the protections that I have mentioned here, it can sometimes take time before the money is in your account and the buffer helps you cope with the finances in the meantime. If you don't have a buffer saving, I recommend starting one right away. Read more about financial buffer at ICA Bank.
Magnus Hjelmer, Vardagsekonom ICA Bank
3 maj 2024
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