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Income Protection and Sick Pay: 9 Facts That Will Surprise You!

17 April 2019

Illness and injury always strike at the moment we least expect it, so you should always have plans in place to cover yourself financially in case you’re left unable to work, whether it’s through a sick pay scheme or income protection insurance.

In the UK, most companies are under no legal obligation to provide their employees with a comprehensive sick pay scheme, as long as they provide the minimum Statutory Sick Pay (SSP). SSP is better than no income at all, but it is simply not enough to cover the bills of someone with a mortgage and a family to provide for.

Thankfully, income protection insurance provides a way of remaining financially stable while you’re unable to work due to being unwell or injured, and it doesn’t rely on your employer’s sick pay scheme.

Here, we take a look at 9 facts about sick pay entitlement and the benefits of income protection, but first, we should probably explain some terms briefly.

What is Statutory Sick Pay?

Statutory Sick Pay is a government-run scheme and must be paid to employees in the UK when they’re too ill or injured to work and have been off work for four or more days consecutively, but it doesn’t necessarily reflect their usual earnings.

How much is Statutory Sick Pay in 2019? You can get £94.25 per week SSP and it can be paid by the employer for up to 28 weeks.

What is Income Protection in the UK?

Income protection is a type of insurance policy that pays out to policyholders who are unable to work due to an illness or injury.

Income protection pays out a sum that’s worth a lot more than what you’d receive from SSP, and it can cost as little as £10 a month, depending on your circumstances.

So, here are the facts…

1 – Most people in the UK don’t know their sick pay entitlements

The first thing most people check for when they receive a new contract of employment is the salary, closely followed by their holiday entitlement. After that, it’s pretty much all about getting the contract signed and starting an exciting venture in a new workplace, especially for those who are going into their first job, or people who have been unemployed for some time.

A significant amount of people in the UK recently admitted to not actually knowing their employer’s sick pay policy, even those who had been at the workplace for more than six months.

2 – Income protection is actually affordable, regardless of your salary

Many people avoid income protection because they think it will be too expensive, but it isn’t, irrespective of your salary. The amount you pay towards the insurance is based on what you earn, as is the payout you receive should you be unable to work.

As the premium is based on your salary, income protection is an affordable and sensible insurance policy for people on any type of wage.

3 – Income protection is tax-free

Income protection usually pays out an amount (monthly) that equates to 65% of an employee’s salary – which doesn’t sound all that great initially, and some people are put off because they mistakenly think they’ll be paid 35% less than their usual wage.

However, that’s not the case as income protection is totally tax-free. So, when you deduct tax from your salary and compare the 65% payout with your actual net pay, it’s really very close to the amount you would usually take home.

4 – Most sick pay schemes won’t pay you for your first day off

The majority of sick pay schemes in the UK tend not to cover one-off days, as their policies normally require more than one day off and have set requirements to meet before you are entitled to it. This is probably in place to avoid people using sick pay for the occasional hangover day or a lazy sofa day here and there.

5 – Income protection and sick pay can work together

Income protection and sick pay can work in conjunction with each other – you just have to defer the start time of income protection.

For example, if you have a workplace sick pay scheme that covers the first four months of illness, you could set your income protection to begin at the end of that four-month period, meaning that you’ll lower your premium by relying less on the insurance policy and – more importantly – you’ll have more paid time off to recover!

6 – Self-employed people and agency workers are entitled to income protection

Another problem with Statutory Sick Pay and most company pay schemes is that they require you to be a contracted employee with the company in order to be entitled to it. However, this isn’t the case with income protection insurance.

As long as you’re currently working, and can provide proof of income (to calculate the level of protection), you are able to take out income protection.

7 – Mental health is covered by sick pay and income protection

Whether you’re suffering with depression, anxiety, or any other mental health issue, you are rightfully entitled to sick pay and income protection, just as you would be for any physical injury.

Mental health is taken seriously, and conditions are seen as equally valid reasons for using income protection cover and sick pay.

8 – Taking days off can benefit you

You could do more harm than good if you decide to force yourself into work, rather than taking a few days off when you’re really unwell.

A problem with the workplace schemes that dismiss the first day off is that people tend to go into work with a cold or flu instead of taking a few days off, as they are essentially missing out on a full day’s pay.

If you’re feeling ill with a cold or flu, be sure to stay at home for a few days and rest up, ready to go back to work feeling refreshed and ready to go. If you force yourself into work, you will risk spreading your illness around the workplace, and you are also unlikely to be doing the job to the best of your ability anyway.

9 – Occupational sick pay schemes can be negotiated

If your employer has a sick pay scheme in place, your sick pay entitlement  can sometimes be negotiable, so use the above argument if your employer needs convincing to pay you for the first day of an illness.

Many people think sick pay is managed by the government and national guidelines ensure everyone has set amounts – but this is not the case. Your company can use any sick pay scheme it wants, as long as it meets the legal minimum, which is SSP.

Consider negotiation if you want more, it could come in handy one day.

Life Quotes Compare: Get the Best Income Protection

Our income protection specialists at Life Quotes Compare are on hand to find the best income protection for you and the cheapest deal to suit your situation. You should try to get it done as soon as possible rather than waiting until it’s too late, as you won’t be able to set up an insurance policy to cover you if you’re already unwell.

All employees should know their sick pay entitlements in the UK and have income protection insurance in place to give themselves some financial security for a rainy day.

Don’t leave yourself in the dark if disaster strikes; let our expert advisors put a plan in place for you and they will ensure that you are covered in all the relevant areas. Get in touch by completing our short contact form and we will be in touch at a time that best suits you.