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Building resilient households

The future of financial provision for those too ill to work

Publication date:

31 October 2016

Last updated:

18 September 2019


Policy and Public Affairs

Each year, a million people in the UK suffer a prolonged absence from work due to sickness. Insurance can, and does, play a significant role both in helping people cope financially during a sickness absence and in getting them back to work. Many other services and agencies also play a major part.

The report seeks to understand the factors affecting resilience to sickness absence and what can be done to help more families weather the effects of this in future.

A million people suffer a prolonged absence from work due to sickness each year, but only one person in ten is covered by income protection insurance, leading to many families experiencing financial hardship. A fortunate minority will continue to be paid by their employer, but most have to rely initially on Statutory Sick Pay of £88 a week, which means a fall of £325 week for the average earner and a loss of £9,000 for someone who is off for six months. 

While some can rely on savings, many others can't, with almost half (46%) of UKhouseholds having savings of less than £1500. A quarter (25%) of Britons could only afford to pay household bills for a maximum of three months if they or their partner were unable to work due to long-term illness, and just over a quarter (26%) could only make a maximum of three monthly mortgage payments.

The Building Resilient Households report raises questions about product design and distribution and how to build public confidence. For the Government, it asks what can be done to the benefits system to better encourage private insurance-based provision and rehabilitation, bearing in mind that every £1 spent on rehabilitation and support services can bring savings of £17 by reducing length of sickness absence. Many of the people who receive this support are covered by insurance through the terms of their policy.

The report calls for a Government-led task force to be established, bringing together the Money Advice Service, employers, distributors, the FCA, relevant charities, health providers and insurers, ensuring that all opportunities are seized to alert people to the need to plan for contingencies such as sickness absence.

It also makes it very clear that current means-testing rules provide a positive disincentive to taking out private protection cover. One of the aims of the report, therefore, is to create a business case for the DWP to amend the rules, providing more of an incentive to arranging financial protection and to pave the way for a move from welfare to self-care.


Pdf icon small  View the Full Report »

Pdf icon small  View the Executive Summary »

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.


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