Workers massively overestimating state disability cover

Paul AvisUK employees are massively over-estimating the amount provided by the Government should they fall ill or become disabled and unable to work, with the average worker expecting 70 per cent more than the state provides.

On average, workers think they will receive £172 per week, with 34 per cent expecting more than £200 per week, almost double the actual figure of £102.15 per week that is the maximum for people who qualify for the Work-Related Activity – for those who could be assisted back to work – Employment and Support Allowance (ESA).

Over half of UK workers – 53 per cent – said they could not live off this ESA payment if this was their only form of income, while 33 per cent could not do so even if they still had their current level of savings or other household income, according to figures from Canada Life Group Insurance. The research found 46 per cent of UK employees would not be able to meet their mortgage or rental payments if they lost their income and had to rely on ESA.

The research found the average UK workers’ savings would last just 4 months if they lost their income, yet 19m 19 million UK employees do not have any form of income protection. Based on a survey of 1,004 workers, the research found 44 per cent say they would rely on savings if they were unable to work, but respondents’ average savings pot of £8,849 would last just 16 weeks based on typical expenditure.

The research also found 9 per cent of workers do not worry about losing income as they believe they could live off State benefits.

Canada Life Group Insurance marketing director Paul Avis says: “When it comes to serious illness or injury, many people assume it either won’t happen to them or they can rely on State benefits when their savings eventually run out. But being unable to work is more common than people think and our research underlines the fact that depending on savings or State benefits is a flawed plan for most employees.

“A savings pot will only last so long, and being accepted for State benefits is by no means a certainty.

Group income protection offers peace of mind that should an employee become too ill to work, their financial situation can be stabilised. In many cases, we aim to get employees back to work before they need to dip into a savings account or apply for State benefits. Our early intervention service (EIS) boasts an 80 per cent return to work rate within the deferred period, and 90 per cent of cases do not result in a claim.”