Brits lost £31.65 billion through illness and injury

One in three Brits has taken more than a week off work through illness or injury, according to new research from Standard Life. 39% of people confirmed they had suffered a loss of earnings because of this time off work, which equates to a staggering £31.65 billion.

Assessing the financial impact of a long-term absence from work due to illness or injury is difficult to quantify, but 37% of those who said they had been off work for more than a week confirmed they were the main bread winner.

And the cost?

26% said they had lost between £250 and £1,000
13% said they had lost between £1,000 and £5,000
11% said they had lost between £5,000 and £40,000
5% said they had lost upwards of £40,000
(45% either didn’t know, refused to answer the question or lost less than £250)

Regionally, how did people fare?

54% of people in Scotland were likely to have lost money through time off work
only 23% of people in Wales and the South West were likely to have lost income
47% of people in the South East were likely to have lost money

How to cope financially while off work?

38% said they had struggled to make ends meet
23% had borrowed from friends and family to get by
11% of employers had continued to pay them while off work
11% had borrowed money from the bank or credit card
5% had deferred mortgage or other big bills while they recovered
8% had some form of insurance to help them out

Mick James, Protection Marketing Manager, Standard Life Assurance Limited, said: “Income protection is a key part of personal financial planning often overlooked by consumers. The state will currently pay a maximum of £78.50 through Incapacity Benefit for every week someone is off on long-term sick leave, although other benefits may also be available like housing benefit or a reduction in council tax. People should understand the risks they face if they don’t have a way of replacing lost income during a period of enforced absence from work.”

Standard Life re-launched its Income Protection Plan (IPP) on 1 December 2006, following a thorough review of the existing product. The revised plan is available from both intermediaries and Standard Life Direct, and is designed to provide a monthly income for people who are unable to work because of illness or injury for a long period of time. Plan benefits are payable after a minimum four week deferred period, although customers can select the deferred period, up to 52 weeks.

Enhancements to the product include:

The introduction of guaranteed rates
The customer can choose a term based plan or cover to a specific age, which means the product is suitable to sell in conjunction with a mortgage
Introduction of index-linked benefits
Premiums can be waived and career break cover is offered as standard features with no additional payment
Cover while not in paid occupation automatically included
Introduction of a guaranteed increase option in the event of a specific event, e.g. marriage, childbirth or adoption, or a mortgage increase associated with moving house or home improvements will not require the insured to submit further medical or financial evidence

Mick James concluded: “I believe Income Protection has a huge amount to offer workers. However, there is currently a clear lack of communication about the benefits of this type of cover, which has meant few people understand what this product is all about. People who are off work for long periods though illness or injury face some stark choices if they have no way of replacing lost income.”