How can you create a safety net for your family if illness stops you from working? King’s cancer diagnosis left many vital questions

The diagnosis of a serious illness shakes the foundations of life. But as well as understanding what this means for health, there are serious financial implications for those who are no longer able to work.

King Charles will not have to worry about losing income as he steps back from official duties due to his cancer treatment, and will also be eligible for a state pension when he turns 75.

But for the approximately 384,000 people diagnosed with cancer each year, low income can pose a major challenge.

Many of us don’t think about how to manage it until a diagnosis poses the question.

Money Mail looks at the support you can rely on from your employer, the state and the insurance policies you can get to support you in these times when you need it most…

Financial threat: For the 384,000 or so people who are diagnosed with cancer each year, a significant drop in income can be a major challenge

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 – can pay your full salary or a percentage for days or months, depending on the generosity of the scheme.

However, even if your employer doesn’t offer any, you may still be entitled to Statutory Sick Pay (SSP).

This pays £109.40 per week for up to 28 weeks and can be claimed from the fourth day of sick leave. 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 salary, you should be entitled to SSP – even if you work part-time or have a zero-hours contract.

Check the Citizens Advice website at citizenssadvice.org.uk or gov.uk/statutory-sick-pay to see if you are eligible.

Some employers also offer workers’ insurance policies as a benefit. Check if your employer offers anything – people often don’t realize that such support exists.

…and if you’re self-employed

Life changing: The king steps back from his official duties

Life changing: The king steps back from his official duties

If you are self-employed or there is another reason why you are not eligible for SSP, you may be able to claim Employment and Support Allowance.

You will need to make sufficient National Insurance contributions and the amount you will receive will depend on factors including your age and whether you are able to return to work.

For more information, see gov.uk/employment-support-allowance.

Will the state provide any assistance?

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 chronic 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.

Income protection if you can’t work

Critical illness and income protection are the two main insurance policies that pay out money if you are prevented from working due to illness.

Critical illness pays a lump sum if you are diagnosed with a serious condition – regardless of whether you are still able to work or not.

Individual policies will specify which conditions are covered but it is usually around 50 or 60.

About 80% of claims on these policies are for heart attacks, strokes and various types of cancer.

Income protection does not have a list of serious conditions. Instead, you pay a monthly sum if you stop working due to illness.

Cover: Critical illness and income protection are the two main insurance policies that pay out money if you are prevented from working due to illness

Cover: Critical illness and income protection are the two main insurance policies that pay out money if you are prevented from working due to illness

These policies tend to pay out either for a fixed period, for the duration of your illness, or from the date you make a claim until state pension age.

When choosing an income protection policy, Kevin Carr, CEO at insurance platform Protection Review, recommends looking for two keywords: “private occupation.”

“Look for policies that pay money if you are unable to do your own work,” he says. “Others may not pay if you consider yourself capable of doing paid work in some capacity.”

The number of people with life insurance policies – which pay out when they die – is far greater than those with income or critical illness cover, according to research by Royal London Life, Pensions and Investment.

While about two-thirds of homeowners have life insurance to protect the family home if they die early, only a fifth have income protection.

But it claims that men and women are statistically six and 12 times more likely to fall ill and unable to work, respectively, than to die unexpectedly.

Critical illness costs about six times more than life insurance, but it can be a lifeline for those who have to claim it.

Policies tend to cough up in about nine out of ten cases, according to Association of British Insurers (ABI) figures.

About £7 billion was paid out last year for critical illness cover, income protection and life insurance policies.

The most common reasons claims are denied include if the illness is not considered serious enough, or, in the case of a serious illness, is not on the list of covered conditions.

What will it cost?

Income protection:

Lifetime cost (monthly)

25 from £10

35 from £15

45 from £35

55 from £60

This would give £2,000 a month tax-free until you’re 65, for a policy that pays out if you can’t work in your current job, assuming you’re a non-smoker in a managerial/office role and premiums remain constant as you age. (Source: Life Search)

Critical illness insurance and life insurance combined:

Lifetime cost (monthly)

25 from £34

35 from £65

45 from £150

55 from £350

This will pay £200,000. For non-smokers with premiums that remain constant with age.

Life and critical illness insurance are usually taken together and include coverage for both, but only pay out once. Such policies tend to cap the maximum age at which benefits are paid, which is 75 or 80. (Source: LifeSearch)

Rachel Rickardstrauss @dailymail.co.uk

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