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Could income protection play a part in helping people with health conditions return to work?

This year’s Autumn Statement has shown a significant commitment to helping people with health conditions return to the workforce. Chancellor Jeremy Hunt has pledged £1.3bn of funding over the next five years to help nearly 700,000 people with health conditions find employment. Currently, more than 100,000 people each year are signed off onto statutory benefits with no requirement to look for work because of their ill health or disability. The chancellor believes that it is essential to put plans in place that will help boost the UK’s economy and aid long-term productivity. Under the Back to Work Plan, the government is planning a series of initiatives including expanding key health and employment programmes. The government is looking to aid over half a million people over the next five years and help those with mental health conditions stay in or find work through activities such as
  • NHS Talking Therapies – increasing the number of people benefitting from courses of mental health treatment by an additional 384,000 people over the next five years and increasing the number of sessions available.
  • Individual Placement and Support (IPS) – aiming to help an additional 100,000 people with severe mental illness to find and keep jobs over the next five years.
  • WorkWell – The service announced at Spring Budget 2023 is being formally launched to Integrated Care Systems across England and will help support people at risk of falling into long-term unemployment due to sickness or disability, through integrated work and health support.
However, the plans have been criticised by many campaigners, with Anastasia Berry, policy co-chair of the Disability Benefits Consortium, pointing out to Sky News that just one in 10 jobs advertised this year has offered home-working as an option. Other campaigners such as Katharine Moxham, spokesperson for Group Risk Development (GriD) told Cover magazine that the government should “address how people fall out of work in the first place and how to manage those with fluctuating health conditions, who could need fast access back to the state safety net at times.”

Where does income protection fit into the debate?

Here at The Insurance Surgery, we advocate heavily for people to take out income protection as early as possible to make sure that you will be financially secure whatever happens. No one likes to think that they would be forced out of the workplace due to ill health, and while statutory support is available, it’s often not enough to live comfortably, especially during the current cost-of-living crisis. For instance, statutory sick pay is capped at £109.40 and is only eligible for up to 28 weeks. It genuinely worries us that many people have no contingencies for what they would do if they became ill or suffered a serious accident and were no longer able to work. There are huge parts of the workforce (e.g. those who are self-employed) who are not eligible for statutory sick pay, so they would have to rely on their savings if they were unable to work, even for a short time. That’s where income protection can be a valuable insurance plan. It promises to pay out a set percentage of your income (typically between 50-70%) until you are fit enough to return to work. For those only eligible for SSP, an income protection plan can boost your income and stabilise your finances. If your illness means you are unable to return to work, your income protection plan will pay out until you reach retirement age, or the policy term ends – whichever is first.

Will income protection payout if you have a pre-existing health condition?

One of the biggest misconceptions is that income protection will not pay out if you need to take time off work due to a pre-existing health condition. The truth is that many income protection insurance policies will pay out, even if you have a known health condition. For people who need to take time out of the workforce to focus on their health, having an income protection payout could give you peace of mind that you are financially secure, rather than relying on state benefits. Income protection plans can cover an array of physical and mental health conditions, and even if you’ve received treatment in the past, that doesn’t mean that you can’t claim for it in the future. If your medical condition only has minimal impact on your day-to-day life, you will likely be accepted for a standard policy. Alternatively, an insurer may add on premium loading (a slightly higher price) or add a specific exclusion to your policy – but you would still be covered for other issues. If you do have a pre-existing health condition and you’re considering income protection, it’s always worth speaking to a broker with access to the whole market. Our advisors can find you the best protection, and explain what any exclusions might mean, as well as explaining how your policy could pay out in worst-case scenarios.

The value-added extras within income protection plans could help you remain working

One of the things that excites us right now is the fact that insurance companies are offering so many more value-added services within their policies. It’s not uncommon for policyholders to have access to virtual GPs, counselling services, physiotherapy and an array of extras that can help improve their physical and mental health, all at no extra cost. At a time when NHS waiting lists are struggling, these value-added extras could be ideal for seeking quicker support or gaining a second opinion. By focusing on treatment at an earlier stage, it may be easier to remain active within the workforce even if you do have a pre-existing health condition. It’s also important to identify whether employers are potentially putting up stumbling blocks that could prevent a return to work. For example, working remotely from home or offering flexible working patterns could be reasonable adjustments under the Equality Act 2010. Speaking to Cover magazine, Katharine Moxham suggested that providing access to group income protection insurance could “include access to help from vocational rehabilitation experts, and access to advice and support with both short- and long-term health conditions.” She even suggested that in the future, “An insurer might even help with the extra costs of keeping someone in work – such as providing or modifying equipment – on an ex-gratia basis.” It may be too early for that, but there are certainly many different ways that an insurance company could help you to remain financially secure, even if you do have a pre-existing health condition. If you’re looking for income protection, talk to us. As independent advisors, we have access to the whole market, which allows us to match you to the ideal insurer. With our support, we can make sure that you and your family remain financially secure, whatever happens.
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