Introduction:
Falling ill or suffering an injury is stressful enough without the added worry of losing your income. If you work in the UK, you may have come across terms like statutory sick pay vs income protection. But do you know how they differ, and which option is better for securing your financial future?
This blog will explore the key differences between Statutory Sick Pay and income protection insurance to help you understand your options when illness or injury keeps you from working.
What is Statutory Sick Pay (SSP)
Statutory Sick Pay is a legal requirement for UK employers to pay their employees when they are too ill or injured to work. Currently, SSP provides £109.40 per week for up to 28 weeks, assuming you meet the eligibility criteria. While SSP offers a basic safety net, it may not be enough to cover your usual living expenses or maintain your lifestyle.
Statutory Sick Pay: How Much Is It?
If you’ve ever asked, “Statutory sick pay – how much is it?” the answer is £109.40 a week. While this is better than no income at all, it might leave you struggling to cover rent, bills, and daily expenses, especially if you are used to a higher income. For many, this amount simply isn’t enough to provide the financial support needed during a prolonged illness or injury.
The Benefits of Income Protection (IP)
Income protection insurance offers a more robust solution. It’s a type of insurance policy that pays a portion of your income if you’re unable to work due to illness or injury. Typically, income protection covers between 50% to 70% of your earnings, giving you significantly more financial security than SSP.
Here’s why income protection can be a better option:
- Higher Payouts: You receive a larger percentage of your income, often up to 70%, which allows you to maintain your standard of living.
- More Flexibility: You can customise your policy to meet your needs, choosing how soon payments start, how long they last, and the amount of cover you want.
- No Restrictions on Employment Type: Income protection covers everyone, whether you’re an employee, self-employed, a contractor, or a freelancer.
- Multiple Claims: You can claim on your income protection policy as many times as needed during the term of the policy.
Why income protection is better than Statutory Sick Pay
There are several reasons why income protection insurance is often the smarter choice:
- It Provides More Financial Support: Statutory Sick Pay is capped at a low weekly amount. By contrast, income protection covers a much larger portion of your income, allowing you to keep up with your financial commitments.
- It Lasts Longer: SSP only pays out for up to 28 weeks. Income protection, however, can continue to pay out until you recover or reach the policy’s end date, which you can set to align with your retirement age.
- It’s Not Just for Employees: Unlike SSP, which only applies to employees, income protection is available for anyone earning an income. Whether you’re self-employed, a contractor, or working part-time, you can still take out income protection.
- It’s More Affordable Than You Think: Many people assume income protection insurance is costly, but there are a range of affordable options. It’s easy to compare policies from different providers and find one that fits your budget. You can even use online calculators to get an instant quote.
Tips for Choosing the Right Income Protection Policy
- Assess Your Income Needs: Calculate how much of your income you’d need to replace if you couldn’t work. This will help you determine the right level of coverage.
- Consider the Waiting Period: Choose a waiting period that makes sense for you. A longer waiting period often means lower premiums, but ensure it aligns with your savings or employer sick pay.
- Compare Policies: Don’t settle for the first policy you come across. Compare different providers to find the most comprehensive coverage at the best price.
- Look for Exclusions: Some policies may not cover certain illnesses or injuries. Always check the policy terms carefully to avoid surprises later.
- Get Professional Advice: As a mortgage and protection adviser, I can help you navigate the market and find the best income protection policy to suit your needs and budget.
Conclusion
While Statutory Sick Pay offers basic protection, it may not be enough to cover your financial needs in the event of illness or injury. Income protection insurance, on the other hand, offers more comprehensive coverage, ensuring that you can maintain your lifestyle and meet your financial obligations if you’re unable to work.
Investing in income protection insurance is a wise decision, particularly if you’re self-employed or rely heavily on your income. Don’t leave your financial wellbeing to chance. Protect yourself and your family with the right coverage today.
If you’re interested in learning more or would like a tailored quote, get in touch. I can compare the market from over 40 protection providers to help you find the best income protection insurance cover,
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📩 Email: lyndsey@westwalesmoney.co.uk
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