State benefits are not designed to provide you with a replacement income. Most people can't rely on the State alone in the event of long-term sickness or unemployment, considering:
Statutory Sick Pay can be just £94.25 per week (£408 a month) - paid for up to 28 weeks;
Employment and Support Allowance (if you are self-employed or continue on from SSP) may allow you to receive up to £109.30 per week (£474 a month) and;
Jobseeker's Allowance is a maximum of £73.10 per week (£317 a month).
Would this even cover your monthly mortgage/rent payment? Think about all of the sacrifices you would have to make. How different would your lifestyle be and how would money worries affect your well-being?
Universal Credit - this is the Government's new scheme which will soon be replacing the benefits cited above. For more information go to: www.gov.uk/universal-credit
Source: GOV.UK - Tax Year 2019/20
It's important to understand exactly where you stand with your employer as the financial impact of being unable to work and earn a wage can be extremely severe to both you and your family. Whilst your employer might continue to pay you, it's important to know how much and for how long. When did you last check?
Your employer must pay you Statutory Sick Pay (SSP) if you qualify for the benefit and have been off work sick for 4 or more days in a row. This is a decent solution, right? Definitely not. The maximum you could receive for up to 28 weeks is £94.25 per week. That's less than the average weekly grocery shop for a family of four!
Your contract of employment should state any additional benefits you are entitled to, however, it's definitely worth checking with your employer.
To help you ask for the information you need, here's draft content you can use to write an email or letter. It's usually best to forward it to your line manager or HR department if you have one:
Dear ............
I'm just reviewing my personal insurance policies to see if I need to take out any additional cover.
Please can you confirm the following:
- If I become ill and cannot work, what benefits would I get from the company (ignoring any State benefits)?
- How long are they paid for and are they guaranteed?
- What would happen after that?
- Does the company have an Income Protection Insurance policy that covers employees? If so, how much would I get paid and for how long?
- Are you also able to confirm if I get Life Insurance and/or Critical Illness Cover with the company (Death in Service Benefit)? If so, is this benefit guaranteed throughout the term of my employment? How much would my family receive?
With most insurers you'll have access to a range of health related benefits and other financial related benefits that could make a real difference in the event of illness or injury - at no extra cost.
You don't have to be claiming under the policy to benefit either. Most services on offer can be accessed at any time. The actual benefits and options available vary from insurer to insurer, but here are some examples:
Health Advice Line - 24/7
Access to medical professionals around the clock - 365 days a year. You can talk in confidence directly to qualified nurses about any health or well-being issues, as often as required.
Counselling and Carer Support Services
Highly experienced counsellors can offer help (over the phone or face-to-face) with any type of mental well-being issue where short-term counselling is appropriate.
Hospital in-patient Benefit
It's difficult for anyone to cope if in hospital for a long period. You could receive up to £200 per night, for up to 90 nights.
Maternity Cover
Gives reassurance that if you become incapacitated whilst on maternity leave, the insurer will treat you as if you are still at work and earning the same amount as before you went on maternity leave.
Proportionate Benefit
If you suffer a long term illness or injury you may never return to your original occupation. However, you might have the ability and desire to do something completely different. As a result, if you will earn less in your new occupation than you did before becoming ill, the insurer will continue to pay a 'top up' benefit to you.
Rehabilitation Benefit
Returning to your previous job after a prolonged period of illness can be a big challenge. You may even need to build up your hours over a period of time. If you return to work on a part-time basis the insurer will pay you a 'top up' benefit.
Therapy Benefit
If you use the following complementary therapies during the policy, you can be reimbursed for up to £200 per year:
A chiropractor, osteopathy or physiotherapy.
*When you take out an Income Protection policy the insurer's Policy Documents will state exactly what added value benefits and options are available to you.
