The COVID-19 pandemic has had significant repercussions in terms of health. Many people have been impacted by “long covid” which has led to being off work for long periods or having to cut down their hours for health reasons. This has affected both the employed and for the self-employed perhaps a downturn in income.
Now that the UK has returned to normal and there are no restrictions now may be time to think about the future if you were off sick. How would you be able to cope financially now that the government support is being removed and there is no furlough pay and less support from mortgage lenders? You may think this will not happen to you but the Department of Health and Social Care’s study of Health in the Workplace, in July 2019, stated that 1 in 25 people in the UK is unable to work due to serious illness or injury.
If you are off work due to an accident or sickness, the first option may be help from your employer (if you are employed). However, whilst some employers offer full pay for periods of 6 months or longer, the reality for many is no employer help at all and your only entitlement is Statutory Sick Pay (SSP). This is currently £99.35 per week compared to the median weekly pay for full-time employees in 2021 of £611 according to the Office for National Statistics (ONS). Imagine, having to survive on less than 16% of your wage on SSP.
You might think about using your savings. For those who have had the chance to save, then the Money Advice Service recommends having the equivalent of 3 months’ wages in savings as a minimum.
The next stage is to start thinking about cutbacks and reducing spending, for example, reducing shopping and cancelling subscriptions. Beyond that, it could be asking for help from family or friends, or you have to start building up debt. This could lead to someone returning to work far sooner than they should, simply because they can’t afford to take the time to recover properly due to the financial pressures being created.
There is, however, a way to protect yourself when you are unable to work. Income protection can be a relatively low-cost option to ensure that you have significantly less to worry about should you be off work due for an extended period of time due to serious illness, accident or injury. It may be that you need to have protection from day one or it may be that you do not need cover for a period of time, say 3, 6 or 12 months. Some people, for example, may wish to be covered up to their retirement age so if they couldn’t work again, they would not have to worry about making ends meet until they retire.
Another benefit of income protection can be the fact that you can still be in receipt of Government benefits alongside your protection. So rather than one or the other, your income can be helped by both.
At Armstrong Watson, we are Chartered independent financial advisers and can discuss all aspects of your protection requirements with you based on your individual circumstances. We know from experience that protection of your income can provide peace of mind at the most difficult of times.