How DO you create a safety net for your family in case illness stops you working?
King’s cancer diagnosis has left many asking a vital question...
ADIAGNOSIS of a critical illness shakes the very foundations of life. But as well as coming to terms with what it means for health, there are serious financial implications for those no longer able to work.
King Charles, as he steps back from official duties due to his cancer treatment, does not have to worry about loss of income, and aged 75 he would also be eligible for the state pension. But for the 384,000 or so people diagnosed with cancer every year, a drop in income can be a big challenge.
Many of us do not consider how we would manage until a diagnosis forces the question.
Money Mail investigates what support you can rely on from your employer, the state and insurance policies you can take out to support you at these times when you need it most . . .
What can you expect from your employer?
EMPLOYERS’ sick pay policies can usually be found in the contract you signed when you joined the company. These policies — contractual sick pay — could pay out your full pay or a percentage for days or months, depending on the generosity of the scheme.
However, even if your employer offers nothing, you may still be entitled to Statutory Sick Pay (SSP). This pays £109.40 a week for up to 28 weeks and can be claimed from the fourth day you are off sick. you receive SSP and contractual sick pay at the same time.
If you earn at least £123 a week on average and your employer takes tax and National Insurance from your pay, you should be entitled to SSP — even if you work part time or are on a zero-hours contract.
Check with Citizens Advice at citizensadvice.org.uk or gov. uk/statutory-sick-pay to see if you are eligible.
Some employers also offer insurance policies to workers as a benefit. Check if your employer offers anything — people often don’t realise such support is in place.
... and if you are self-employed
IF YOU are self- employed or there is another reason you are not eligible for SSP, you may be able to claim Employment and Support Allowance. you will need to have made sufficient National Insurance contributions and how much you get will depend on factors including your age and whether you’re able to get back into work.
for more information, see gov. uk/employment-support-allowance.
Will the state offer any help?
WHEN you are no longer eligible for the above, other support includes universal Credit, Disability Living Allowance and Personal Independence Payment (PIP). What you can get depends on whether your illness is terminal or if you may be able to work again.
There is a good overview of the support available if you are disabled or have a health condition at gov.uk/browse/benefits/ disability. Citizens Advice may also be able to help you navigate the system.
Protecting income if you can’t work
CRITICAL illness and income protection are the two main insurance policies that pay out if you are prevented from working due to illness.
Critical illness pays out a set, lump sum if you are diagnosed with a serious condition — regardless of whether or not you are still able to work. Individual policies will set out which conditions are covered but it’s normally around 50 or 60.
Around 80 pc of claims on these policies tend to be for heart attacks, strokes and different types of cancer.
Income protection has no list of serious conditions. Instead, it pays a monthly sum if you are stopped from working by illness. These policies tend to pay out either for a set time, for the duration of your illness, or from the date at which you claim until state retirement age.
Kevin Carr, chief executive at insurance platform Protection review, recommends that when choosing an income protection policy, to look out for two key words: ‘own occupation’.
‘Look for policies that pay out if you are unable to do your own job,’ he says. ‘ others may not pay if it is deemed that you are capable of doing paid work in some capacity.’
far more people have life insurance policies — which pay out when they die — than have income or critical illness cover, according to research from life, pensions and investment company royal London.
While around two-thirds of homeowners have life cover to safeguard the family home if they die early, just a fifth have income protection.
But it claims men and women are statistically around six and 12 times respectively more likely to be ill and unable to work than to die unexpectedly.
Critical illness tends to cost around six times more than life insurance, but can be a lifeline to those forced to claim. Policies tend to cough up in around nine in ten cases, according to figures from the Association of British Insurers (ABI).
Around £7 billion was paid out last year for critical illness, income protection and life insurance policies. The most common reasons claims are rejected include if an illness is not considered severe enough or, in the case of critical illness, is not on the list of conditions covered.