INSURANCE

Benefits Available From the State

If an injury, illness or accident prevents you from working, you may have difficulty keeping up repayments on your mortgage, car loan, credit cards and personal loans. Covering the basic costs of living becomes a priority when you suffer a sudden loss of income. In addition to payouts from income protection insurance types such as unit linked IPI, a financial product that replaces a percentage of your income if you become unemployed for medical reasons, you may receive benefits from the state.

For most households, state benefits are not sufficient to cover all of their costs. Income protection insurance can fill the gap between your usual earnings and the money you receive from the state. During a period of unemployment, it is important to draw from all available resources to protect your financial interests and avoid the consequences of falling behind in your repayments. In addition to state benefits and income protection insurance, consider using your personal savings or borrowing from family members.

Statutory Sick Pay

Statutory sick pay, or SSP, can be paid out by your employer if you are too ill or disabled to work for 4 consecutive days. The 4 days may include weekends or bank holidays. You must earn a minimum weekly income in order to qualify for SSP benefits, and you must be working under a contract of service.

In order to receive SSP benefits, you must tell your employer that you are ill. The requirements for informing an employer of your illness may vary from one company to the next. If your employer has not established any requirements, you should provide notice within the first 7 days that you become sick to ensure that you receive your benefits promptly. You are not required to inform your employer in person; however, you may be required to provide medical evidence that you are not fit to work for health reasons.

Your SSP benefits will constitute only a percentage of your income, which is determined by estimating your average earnings during the 8 weeks prior to your illness. You will typically receive payment on your usual payday. SSP is subject to tax and National Insurance contributions. However, if you are receiving only SSP during your illness, your income may be too low to be taxed. Income protection insurance benefits, by comparison, are not subject to income tax.

Employment Support and Allowance

You may receive SSP for up to 28 days after you become too ill to work. At the end of this time, if you are still not fit to return to work, you may apply for Employment Support and Allowance, or ESA. You may also apply for Employment Support and Allowance if you are self employed. Whilst you are receiving ESA benefits, you will have access to occupational training services and condition management, which will may help you to return to work more quickly and cope with your medical condition in the workplace.

If you are severely incapacitated by an illness or injury and cannot resume your job, you will not be expected to prepare for a return to work unless you want to. The amount you receive will depend on a number of factors, including the severity of your condition and your financial circumstances. ESA benefits are not intended to replace your regular earnings, and many families are unable to cope financially on state benefits alone.

In addition to benefits available from the state, consider investing in affordable IPI. With IPI benefits, you can cover many of the expenses that may not be covered by SSP or ESA. You may also enjoy greater peace of mind about your financial stability as you regain your health.

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