You don’t know what’s around the corner, but that doesn’t mean you can’t prepare for it.

A financial shock could derail your short- and long-term plans and might mean you face additional stress at an already difficult time. So, creating a financial safety net that you can rely on should the unexpected happen could offer you peace of mind.

Over the next few months, you can read about how financial protection might provide a cash injection if you’re unable to work due to an accident or illness. Read on to find out how appropriate financial protection may help you bridge the financial gap if your income stops.

7% of economically inactive people are dealing with long-term sickness

No one wants to think about becoming too ill to work. However, the chances of it happening could be higher than you think.

Indeed, an April 2024 report published by the House of Commons Library estimated that around 7% of the working-age population who are economically inactive are dealing with long-term sickness.

In many cases, those who cannot work will see their income slashed, which may mean they cannot meet essential financial commitments. This added stress could make recovery even more challenging. So, it’s important to understand how you’d cope financially if your income stopped and whether there’s a potential gap.

3 ways you might receive an income if you’re unable to work

Statutory Sick Pay

If you’re an employee who earns at least £125 a week, you’re normally entitled to Statutory Sick Pay (SSP). While this could provide some income if you’re unable to work, it’s often not enough on its own to cover regular household expenses.

Indeed, SSP is just £118.75 a week, so you’re likely to face a shortfall if you’re relying on this alone. In addition, SSP will only be paid for up to 28 weeks. So, those facing a long-term illness could find the money they receive through SSP stops.

According to Citizens Advice in November 2024, around a quarter of workers have to rely on SSP alone if they’re unable to work.

Occupational sick pay

In addition to SSP, around half of workers would benefit from receiving their full wages through occupational sick pay. It’s worth checking your employee handbook or contract to see if your workplace would continue to pay you an income if you’re unable to work.

If your employer provides sick pay, there are two key things to check:

1. Would you receive your full salary or a portion of it?

2. How long could you receive occupational sick pay for?

It’s common for the amount you receive through occupational sick pay to reduce the longer you’re off. For example, you may receive your full salary for the first six months, and then half your regular pay for a further six months.

So, even if your employer offers sick pay, you could still face an income gap.

Depleting your assets

If you need to create an income while you’re ill, another option is to use your assets. You might withdraw money from your savings or investments to cover day-to-day costs.

While useful, if the money wasn’t earmarked as an emergency fund, depleting your assets might affect other goals, from going on holiday to your retirement.

Financial protection may provide an income injection when you need it most

Depending on the type of financial protection you take out, it could provide either a regular income or a lump sum if you’re not able to work due to an illness or accident.

So, if you’d struggle to cope financially if your income unexpectedly stopped, financial protection might be a safety net you want to consider. Not worrying about how you’ll pay the bills could make your recovery smoother or mean you have more options if returning to work isn’t possible.

Contact us to talk about your financial safety net

We don’t have a crystal ball to predict what will happen in the future. However, we can work with you to create a financial plan that includes a safety net should the unexpected happen.

If you’d like to understand what steps you might take to create long-term financial security, please get in touch.

Next month, read our blog to discover the different types of financial protection that may be useful for you and your family.

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.