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Facing up to possible incapacity

Incapacity to work can arise from sickness or accident. There is help from the state, but is it enough?

Sick pay

If you are employed, your employer pays you statutory sick pay, but it only continues for six months and the maximum at the time of going to press is only £62.20 a week.

Incapacity benefit

There is a state benefit for incapacity, tax free, but a medical check is required.

It is not payable if you are in receipt of statutory sick pay or if you are capable of doing any work, i.e. not only your former job.

Housing costs

The state gives help with mortgage interest payments and certain other housing costs if you are out of work, but you must be eligible for Income Support, which means a low income and savings of less than £8,000.

Sickness insurance

Your employer might give cover at a higher level than the maximum and/or for a longer period. If not, consider insurance. Your trade union might have a policy. Another source is a friendly society.

Insurance is available to cover sickness, incapacity and unemployment together and this might be more appropriate for you.

Credit insurance

This covers the risk of not being able to pay

the interest on a loan (such as a mortgage, when it is called a mortgage protection policy) in the event of loss of income due to disability, illness or redundancy as well as death. It is expensive, but unless you have savings you should consider it.

It is not available to self-employed people and there can be difficulties in connection with redundancy. Check the wording and find out whether pre-existing health problems are covered.

Permanent health insurance

This covers permanent incapacity, which may be more important to you than life cover (you are 14 times more likely to be off work for more than six months than you are to die before 65). Employers sometimes provide cover for senior staff.

Critical illness insurance

This pays a lump sum if you contract one of a specified list of potentially terminal illnesses, such as cancer. But a combination of life cover and permanent health may be better, as the cover is wider.

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