Income protection a much better option than statutory sick pay
Among the changes to David Cameron's team in September, you may or may not have been aware of the departure of Larry from 10 Downing Street. "Larry." I hear you ask. "Who's Larry?"
Not the Conservative MP Larry Miller, who made comments in February this year comparing Liberal support for the gun registry to the policies of Adolf Hitler (comments he later retracted), but Larry the Downing Street cat. He has been sacked as chief mouse catcher by David Cameron after a dismal performance this year.
Larry was recruited last February to rid Number 10 of its rodent problem, but swiftly earned a reputation for napping rather than ratting. It took Larry six months in the post before he made his first "confirmed kill" in August, and he does not appear to have made any since. If rumours are to be believed, the breaking point came when the Prime Minister found Larry asleep on his chair in his Number 10 study as a mouse ran across the room.
Like Larry, you may not be able to protect against being fired from your job. However, unlike Larry, you can take steps to protect your income in the event of accident or sickness preventing you from working.
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According to the Office for National Statistics, there is a one in 16 chance of being off work for six months or more at some point during your working life due to sickness or disability. Most of us will know at least this number of people that are employed, be it friends, family or colleagues, and so there is a strong chance that you know someone who will be, or has been, in this situation at some point in their life.
I know this subject has been discussed a number of times in this column in recent years, but I make no apologies for mentioning it again. If you are unfortunate to be off work for six months or more then it is likely that existing provisions (employer benefits, statutory sick pay) will not replace the income that you are used to. The consequence? A drop in living standards, and a possible struggle to meet monthly expenditure (and at a time when you may need to be considering care costs/travel to and from hospital).
What action can you take? Rely on sick pay from your employer? Few employers outside of the public sector will offer much in the way of benefits.
What about statutory sick pay? Currently, this amounts to just £85.85 per week (around £370 per month) – how many of us could rely on this to pay for the monthly bills? It may cover your weekly shopping, but that would be about it.
Fewer than 10% of UK workers have income protection, at an average cost of £430 per year (source: Association of British Insurers). The other 90% cannot all be working for the public service (and even if they do, benefits typically cease after 12 months), and so for the sake of maybe £10 per week, they should be considering protecting what is likely to be their most important "asset", their income.
Premiums do vary, depending on age, health profile and provider, while the payout also depends on job type and when employer benefits commence and for how long. However, further information, and an indication of the possible cost of cover, can be obtained by contacting the details below.