The possibility of getting a serious illness or injury isn’t something we like to think about, but being prepared can help you to avoid money worries if you do ever need to take time off work
If something were to happen to you that meant you couldn’t work, would you be able to keep paying the bills? With more than a million people in the UK have to take time off for serious illness or injury each year, according to the Association of British Insurers, it’s really worth being prepared.
“Most families rely on both partners’ income to pay their monthly bills, and don’t think about the impact losing one income will have on their standard of living,” says Christina Rigby, Product Owner at Royal London. “Many people recognise the need to take out life insurance to pay off their mortgage if they die, but don’t think about how their family can continue to pay their rent or mortgage if they’re ill or injured, and unable to work for a long period of time.”
So, what can you do to protect yourself, your family and your lifestyle?
Find out how much you’ll get from your employer
Start by finding out how much sick pay your employer will provide. While most employees will be entitled to 28 weeks of Statutory Sick Pay, it’s set at a very low level (£95.85 a week in the 2020/21 tax year) and is unlikely to be enough to pay a family’s bills. Some employers offer company sick pay on top of that – for example, with some time on full pay and a further period on half pay – and some provide health insurance schemes to cover or help with medical costs, so it’s worth checking what you can get.
See if you’re entitled to any help
You may be able to claim state benefits for periods of time off work. Employment and Support Allowance is designed for people with health conditions that make it difficult to work, and Citizen’s Advice has information on other benefits for sickness and disability too. You could also be entitled to help from your local council if your condition means it’s hard for you to do day-to-day tasks. Finally, if you’re struggling with bills, you may qualify for a discount from your energy supplier through the Warm Home Discount Scheme. But, overall, these benefits still provide a relatively low income so it’s best not to rely on them completely.
Work out your monthly budget
The next step is to work out how much you and your family would need if you find yourself unable to work, taking account of your savings and any other income you might have. Using a Budget Planner is a great way to work out what you’re spending each month, from household bills to general living costs. Having a good idea of your overall budget will make it easier to make changes, or cut back in certain areas, if money becomes a little tighter. If you do find yourself having to review your spending, take a look at our 10 money management tips.
See what type of insurance could work for you
Not many of us will have enough savings to manage financially for long periods of illness – particularly if this money is earmarked for things like retirement or helping children with their education. That’s where insurance protection comes in, and there are a variety of products that can help to cover specific costs, or replace income, should you find yourself unable to work. It’s a good idea to do some research on the different types of insurance on offer to see what might suit you best.
Useful insurance products for when you’re unable to work
- Income protection: Offers a regular income for when you’re off sick. It’s especially useful for self-employed people, who don’t have statutory or occupational sick pay.
- Mortgage protection: Specific insurance to cover your mortgage repayments, typically between six months and two years, if you’re off work or made redundant.
- Payment protection: Gives you short-term cover for a loan or credit repayment if you’re unable to work because of illness, disability or redundancy.
- Critical illness cover: Provides a lump sum in a medical emergency, such as being diagnosed with a specified life-threatening disease like cancer or a heart condition.
- Private medical insurance: Pays for some or all of your medical bills if you’re treated privately. It may help you to get treatment more quickly.
- Health cash plan: Provides a cash sum if you need medical treatment. It’s unlikely to cover major costs, or replace income for long periods, but can be useful for dental, podiatry and other minor procedures.
The cost of these products varies depending on things like age, your health and the amount of cover needed. But they can offer peace of mind at a difficult time.
Remember to look after yourself
Taking time off for illness or injury can have an impact on your mental health as well as your finances, especially if your condition means you’ve had to make big life changes. Aside from family, friends and colleagues, there are lots of places you can get support. Try making an appointment to see your GP, or take a look at the following support services:
- Mind: advice and support for anyone experiencing mental health issues
- Scope: practical information and emotional support for disabled people
- GOV.UK: find a community support group or organisation
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