Since 6th April, Statutory Sick Pay (SSP) has been worth £81.60 a week, for those earning at least £5,304 a year. SSP lasts for just 28 weeks, after which other forms of benefit may be available.
If you are earning £25,000 a year and suddenly become ill, your net income will fall from around £1,610 a month net, to £353.60 a month; a reduction of more than 75%. If you are only ill for a week or so, this is not likely to cause you any significant inconvenience, but should incapacity last much longer, then the financial consequences could be disastrous.
Some employees are better off
Employees working for forward-looking businesses may be members of a group sick pay scheme that provides a much higher percentage of income whilst they are incapacitated and this can last for quite a long time. However, with many companies still cutting costs to compete in the post-credit crunch world, such generous schemes may become rare. In any event, they may not be available to new recruits. If such a scheme is open to you, then you may not even have to do anything to benefit — your human resources department will be able to advise you on where you stand.
What about the rest of us?
For the majority of employees, however, SSP is all they have to look forward to, so making personal provision is essential if families are not to be considerably worse off in the event of serious accident or illness. Fortunately, you can arrange various types of insurance to provide an income should things go wrong. Annually renewable personal accident and sickness insurance can provide, amongst other things, a weekly income if you are incapacitated. This can generally last for up to one or two years and the cost is based on your occupation and the amount of cover required.
For longer-term incapacity
Some illnesses can last for much longer, so permanent
health insurance (PHI) is available to provide for this. PHI pays out a monthly benefit, after what is called a waiting period, until: the end of the illness; a pre-agreed age; or prior death. The waiting period is the time after the onset of each illness or accident that you have to wait before benefit payment starts and it can range from 4 to 104 weeks. The longer the waiting period, the lower the monthly cost. The premiums, once set, remain level for the entire term, unless a basis for increases is agreed in advance – perhaps to allow for indexation of benefits, or occasionally to reflect a significant change in occupation. This form of insurance is age related (although gender will no longer be a rating factor from 21st December 2012, thanks to a recent decision of the European Court of Justice) and, as mentioned above, occupation also influences costs.
You should take individual professional advice before making any decision relating to your personal finances.
Take advantage of our online
health insurance calculator and find out more about
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