Employees have unrealistic plans to financially survive long-term sick leave

  • Health41% of employees would rely on savings to survive a period of long-term sick leave
  • One in four employees (27%) would have to rely on state benefits
  • UK employees with a reliance on state provision could be £1,360 a month better off if their employer insured them for long-term sick pay

New research from Group Risk Development (GRiD), the trade body for the group risk industry, has found that 41% of employees would be obliged to rely on their savings to preserve their lifestyle and provide for their loved ones if they were forced out of work for any length of time due to illness or injury.

However, with the average household savings at only £20 a month (ONS Family Spending 2013), this seems less than realistic.

A further quarter of employees (27%) said they would have to rely on state benefits if they were forced out of work for any length of time. The stark reality is that Employment & Support Allowance (ESA) is, at best, £108 a week, after 14 weeks’ absence from work. This highlights the importance of protecting income against long term absence from work, as the average weekly household expenditure in the UK is £489 a week (ONS Family Spending 2013) – leaving consumers approximately £381 a week short (£1,651 a month).

By comparison, those who gained support from employer sponsored income protection, received on average £421 a week (£1,828 a month) during 2013 according to the latest industry data compiled by Group Risk Development (GRID).

Relying solely on savings or state support means that many employees would be left with a significant financial shortfall if they were off sick for any length of time. Unfortunately, just 15% of employees questioned said they currently have their own insurance in place that would pay out in the event of ill health.

Income protection is a readily available, cost effective way of protecting against long term sick leave and it can provide a valuable safety net for many UK families. Employers are in a unique position to facilitate affordable income protection for their staff and are increasingly being recognised as an effective facilitator of benefits, as shown in the pensions arena with the recent introduction of Auto-enrolment

Encouragingly, 51% of employers questioned claimed to provide Group Income Protection to their employees, but this is only the start to providing support to families in the event of long-term illness or disability.

Katharine Moxham, spokesperson for Group Risk Development, said: “Our research shows just how vital income protection benefits are to people who fall sick. Without provision in place they are obliged to dip into meagre savings and lean heavily on the state, which will not necessarily meet their financial needs. There is a small minority of individuals who protect themselves against long term sick leave but the majority appear to have unrealistic plans to survive financially.

“Group Income Protection is a hugely valued benefit and it works to help employees in many ways.  The claim is a just small part of the benefit as the priority is to get people back to work as quickly as possible and in a sustainable way.

“Employers who make provision for their work force are under no obligation to do so but those that do are well placed to make a real difference to them and their families in a time of financial and personal distress. What’s more they are also providing a vital means of reducing the UK’s sickness absence burden and producing a more financially resilient society.”




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