Protection insurance can be a valuable safety net for you or your family, should you become ill or die. However, in some cases, you might find you already be covered in some way either as part of your work benefits or through the state.
It’s always a good idea to check if your employer provides you with some level of cover.
Find out what workplace benefits you have by looking at your contract or pension documents.
If you’re still not sure, speak to your organisation’s HR department.
You might find that your workplace benefits already include income protection insurance, or entitle you to cheaper rates from suppliers.
There are several types of protection cover and benefits which your employer might offer and we’ve put together a list of the most common.
Private medical insurance
Some organisations provide their employees with private medical insurance.
This means that if you become ill, you will be able to access private medical care.
You will have to pay tax on your private medical insurance premiums, however, company schemes are often significantly cheaper than what’s available on the market and are more likely to include cover for pre-existing conditions.
This type of insurance will typically provide a lump sum payment to your beneficiaries, should you die.
As well as the type of policy you have the monthly premium you pay will be dependent on your age, health, lifestyle and how much cover you need.
Your employer might have a death-in-service life insurance policy for its employees. This can pay out a lump sum to any dependants on your death while you are still employed.
Group income protection
This type of policy will pay out a percentage of your salary should you become unable to work due to accident or an illness.
You can get this type of insurance independently, however, it is often cheaper to buy it through your employer.
If something happens to you, the group income protection insurer will pay an arranged sum to your employer who will in turn pay it to you.
It’s worth noting that tax and National Insurance are deducted from group income protection, unlike individual income protection.
Critical illness cover
Critical illness cover pays out a lump sum to employees affected by certain medical conditions.
The conditions which would result in lump sum payment are pre-determined by the insurance provider.
For example, you might find that the policy covers a stroke, but not skin cancer.
Although you have no legal right to contractual sick pay from your employer, you might find that your work contract includes some cover for when you’re unwell.
The extent of any protection is up to your employer, so it’s worth having a look to find out what you’re entitled to.
This is not the same as Statutory Sick Pay (see below).
Although the state might provide you or your family with some financial support, the amount provided could be much less than you would expect.
In certain circumstances the state will provide you or your family with financial support when something goes wrong.
Common benefits you might receive include:
- Support Allowance
- Jobseeker’s Allowance
- Personal Independence Payment.
Statutory Sick Pay
If you become ill and are unable to work, your employer will provide you with sick pay.
The standard rate for Statutory Sick Pay is £94.25 per week and will be paid out by your employer for up to 28 weeks.
There are a number of criteria which you will need to fulfil to qualify for Statutory Sick Pay, which you can find on the Government’s dedicated guide.
Personal Independence Payment
This benefit provides financial support to cover the costs of long-term ill-health or disability.PIP is made up of 2 components (parts) called daily living and mobility, and each can be paid at either a standard or enhanced rate.
The daily living rate is for the extra help you need with everyday tasks. This can include preparing food, washing, getting dressed or communicating with other people.
The mobility rate is for the extra help you need getting around. This can include moving, planning a journey or following a route.
Payments range from £23.20 to £148.85 a week and are dependent on how your condition affects you, not the condition itself.
Employment and Support Allowance
Employment and Support Allowance provides financial help to those unable to work due to illness or disability.
In order to find out what you’re entitled to, you’ll have to attend a Work Capability Assessment to determine to what extent your illness or disability affects your capacity to work.
You will usually be paid an initial assessment rate while you wait for your Work Capability Assessment.
If you qualify for ESA, payments will depend on how much support you need and range between £73.10 and £110.75. You might be entitled to extra payments if you have severe needs.
If you lose your job, you can get in touch with your local Jobcentre Plus or Jobs and Benefits Office to find out what benefits you might be entitled to.
More information on Jobseeker’s Allowanceopens in new window.
Universal Credit is a single monthly payment for people in or out of work.
It replaces some of the benefits and tax credits that you might be getting now.
Find out more in our guide on Universal Credit.
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