Statutory Sick Pay Vs Income Protection
Statutory sick pay and income protection can both help you out in times when you’re ill or injured for more than a certain number of days, but they both have different terms and different benefits and drawbacks.
In this guide, we’ll explain exactly what you need to know about them and which one you require.
What is Statutory Sick Pay?
Statutory sick pay – sometimes referred to as SSP – is a scheme put in place by the government to ensure that, if you are too ill to work, you are not left completely on your own.
SSP is a legal requirement and employers must begin paying it to you (only if you qualify) on your fourth consecutive day off work sick – this includes non-working days, such as weekends or bank holidays.
How much is Statutory Sick Pay?
If you work full-time, you are entitled to £94.25 a week from your employer for up to 28 weeks. Statutory sick pay entitlement for part-time workers will be paid on a pro-rata basis, depending on how many hours they work.
Your weekly earnings must average a minimum of £118 to qualify for SSP. This is determined on your average earnings over the 8 weeks prior to your illness.
For example, if you only work 4 days a week, your employer would only have to pay you 80% (£75.40) of SSP a week.
You are only paid for the days on which you would normally be in work (qualifying days), and will receive payment in the same way as you do normally – on your usual payday, deducting tax and National Insurance.
How do I get Statutory Sick Pay?
To apply for sick pay in the UK, you must inform your employers of your intention to claim statutory sick pay within the deadline set by your employer. If your employer has not set a deadline, then you must apply for statutory sick pay within 7 days.
For example, if you are off sick for 7 days and your employer has set a limit of 5 days’ notice, but you inform them on the 7th day, you are not entitled to statutory sick pay for those 2 days that you were late to inform your employer.
If your employer was informed within the set deadline, your employer will pay you statutory sick pay starting from the 4th day that you are absent from work.
Remember to check all of this with your employer first, as each workplace is different and has different rules. Also, be sure to ask your employer for their chosen method of communication if you are sick - usually, via phone is best.
Your employer cannot:
- Insist that you inform them in person, or with a specific ‘statutory sick pay form’.
- Ask for proof of sickness – such as a doctor’s note – until you have been off for 7 days (including non-working days).
Do I qualify for Statutory Sick Pay?
You qualify for SSP if you…
- Are an employee
- Have been away from work through illness for 4 days (including non-working days)
- Have earned an average of £116 per week (or more?) for 8 weeks
- Have told your employer that you are sick before the deadline
…then you are within your rights to apply for SSP.
I am self-employed – can I get Statutory Sick Pay?
While it is a government-run scheme, statutory sick pay is paid by your employer and not the government, so if you are self-employed, you cannot apply for SSP.
Because of this, you may wish to consider what other options are available to you should you become sick and unable to work. One of these options is income protection insurance.
What is Income Protection Insurance in the UK?
Income protection insurance, sometimes referred to as permanent health insurance, provides you with supplementary funding – on top of other sickness benefits such as SSP – should you find yourself unable to work.
It is a personal policy so it does not require interaction with an employer, or indeed the presence of an employer at all if you are looking for self-employed sick pay.
Income Protection Insurance can be easily tailored to your personal needs, ensuring that you get value for money when taking out your policy and are adequately covered should you need to take time away from work.
There are longer periods of cover available which, unlike SSP, can provide you with years of cover should you suffer a serious illness or injury. Lower cost options such as short-term Income Protection Insurance are also available at a cheaper rate, if you deem that to be adequate for you needs. Your best option would be to get a quote from an insurance broker who can find you the best deal suited to you and your budget. At Bobatoo, we can help get you a bespoke quote now - simply tap the green button below!
How much does Income Protection Insurance cost?
Similarly to life or health insurance, the cost of your Income Protection Insurance premiums will vary depending on your health, whether or not you smoke, how long you want your policy to last and the amount of cover you are applying for.
However, another important factor considered by your insurer is the level of risk involved with your job. These are usually split into four ‘classes’ with class 1 considered the least risky and class 4 considered the most. For example:
Class 1: Office-based occupations with little-to-no travel required as part of the job.
Class 2: Workers with high business mileage; skilled occupations involving a moderate degree of manual work; journalist, shop assistant.
Class 3: Skilled and semi-skilled non-manual and manual occupations; teacher, care worker, plumber.
Class 4: Occupations involving excessive driving, heavy manual labour and some unskilled occupations; construction, mechanic, oil-rig worker.
Your occupation could fall into a different class depending on your insurer, so check with them to ensure you are getting the correct level of cover.
When setting up your Income Protection policy, you will agree on a set period that will need to pass before being able to put in a claim – anytime between 1 and 12 months. The longer you choose, the cheaper your premiums will tend to be.
How much does Income Protection Insurance pay out?
This depends on the level of cover that you choose, but it usually falls between 50% and 70% of your usual gross earnings.
For example, if your gross annual salary is £35,000 and you take out an IP policy to cover you for 70% of your earnings, you should receive £24,500 (£2,042 p/month) over the year.
The good news is that any money received through your income insurance is tax-free, so this will usually come close to your average monthly pay depending on the level of cover you opt for.
NOTE: Income protection is classed as ‘unearned income’, so any money received through your income insurance could have an effect on any other benefits you receive. Check with a financial advisor or life insurance broker before taking out an IP policy if you think this could be relevant to you.
What does Income Protection Insurance cover?
Income Protection Insurance only covers you if you are unable to work through illness or injury – it does not cover lack of income through redundancy.
When setting up your income insurance policy, you will be given the choice of how your insurer will define your ability to work. The three options, varying in price and the level of cover offered, are:
Activities of daily living
This is the cheapest form of cover, as it would require an extremely serious and unlikely illness or injury to pay out.
Activities of daily living (or ADL) policies will only pay out if you are unable to perform basic activities such as showering, using the toilet, brushing your teeth or even walking.
Your insurer will issue you with a list of activities covered, with you usually needing to be unable to perform at least 3 of them to qualify for a payout.
Although cheaper, this level of insurance is restrictive and could leave you without help if unable to work, but still able to perform basic tasks.
‘Suited Occupation’ income protection
With this level of cover, your insurer will be slightly more understanding, however, they will not pay out if they believe you are able to do a similar job to which you are suited.
For example, if you are encouraged to take time away from your senior or managerial position within your workplace due to stress, your insurer may insist that you move down to a less senior level, rather than issue you with a payout.
‘Own occupation’ income protection
This is the most comprehensive – and expensive – option of IP insurance, as it covers you for any illness or injury that would prevent you from working in your current role.
For more advice on a policy suited to you and your needs, don’t hesitate to get in touch with us today!
Is Income Protection Insurance worth it?
Do you need Income Protection Insurance? If you are looking at taking out a policy, ask yourself the following questions:
- How much is the sick pay offered by my employer? Some employers will continue to pay your full salary for a set period of time.
- Could I get by on government benefits? If your outgoings are relatively low, government schemes like SSP could be enough for you.
- Do I have money saved? If you have a significant amount of savings, this might be enough to get you through your recovery.
- Could I consider retiring? If you’re nearing an age that you could consider retirement, you might be able to take your pension early if you were unable to work.
- Could my family support me? If your family – perhaps your partner or parents – have a significant income, they may be able to offer you financial aid during your recovery.
Where can I get Income Protection Insurance?
Here at Bobatoo, we work with a host of leading income protection insurance providers in the UK to help find you a great deal.
Get your free, no-obligation quote now: