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The simple answer is yes. Income protection and sick pay can work together.
In this blog post, we’ll explain how income protection insurance works alongside workplace sick pay and state benefits. We’ll also explore why having both could give you stronger financial security.
By the end, you’ll understand the basics and be better equipped to decide what protection might suit your needs.
What Is Sick Pay in the UK?
Before looking at income protection insurance, it’s useful to understand the main types of sick pay available in the UK.
| Type of sick pay | What it means |
|---|---|
| Statutory Sick Pay | The minimum sick pay your employer may legally need to pay if you’re too ill to work |
| Employer sick pay | Extra sick pay offered by some employers through company or contractual schemes |
| State benefits | Support that may be available in some long-term illness or disability situations |
Statutory Sick Pay
Statutory Sick Pay, often called SSP, is money your employer legally must pay you if you’re too ill to work and meet the eligibility rules.
Currently, SSP pays up to £109.40 per week and is available for up to 28 weeks as of 2024.
This is the minimum. Some employers provide more generous sick pay schemes.
Employer Sick Pay Schemes
Many employers offer sick pay on top of SSP. This is sometimes called:
- Company sick pay
- Contractual sick pay
- Occupational sick pay
These schemes may pay your full salary for a set period, such as 4 weeks, before reducing to a lower amount or SSP level.
The exact amount and length of cover varies by employer, so it is worth checking your employment contract or staff handbook.
Limitations of Sick Pay
Sick pay can be helpful, but it often has limits.
Common limitations include:
- Short-term support: sick pay usually does not last beyond a few months.
- Payment caps: SSP is capped at a fixed weekly rate, which may be much lower than your normal earnings.
- Different employer rules: company sick pay varies greatly from one workplace to another.
- Possible delays or exclusions: some conditions or absence situations may not qualify immediately.
Because of these limitations, many people look for additional protection.
What Is Income Protection Insurance?
Income protection insurance is a type of protection insurance designed to replace part of your income if you are ill or injured and cannot work for a longer period.
It is designed to help with everyday financial commitments such as:
- Mortgage or rent payments
- Utility bills
- Food and household costs
- Childcare costs
- Loan or credit commitments
- General living expenses
How Income Protection Usually Works
| Feature | What it usually means |
|---|---|
| Income replacement | It usually pays between 50% and 70% of your gross salary |
| Payment period | It can pay until you return to work or reach retirement age, depending on the policy |
| Waiting period | You choose how long you wait before payments start |
| Claim trigger | It pays if you meet the policy definition of being unable to work due to illness or injury |
| Policy terms | Cover is subject to eligibility, underwriting, exclusions and policy conditions |
You choose a waiting period before payments start. This could be a few weeks or a few months.
Income protection is often arranged to begin after your employer sick pay reduces or ends.
Can I Have Both Income Protection and Sick Pay?
Yes, absolutely.
Income protection insurance is designed to complement your sick pay, not replace it.
In many cases, your income protection policy will start paying after your sick pay finishes, or after the waiting period you selected when setting up the policy.
How Sick Pay and Income Protection Can Work Together
| Stage | What may happen |
|---|---|
| First few weeks off work | Employer sick pay or SSP may support you |
| After sick pay reduces or ends | Income protection may begin if the waiting period has passed |
| Long-term absence | Income protection may continue depending on the policy terms |
| Return to work | Payments usually stop when you are able to return to work |
Example 1: Sarah, Office Worker
Sarah works in an office and has 4 weeks of full employer sick pay.
She also takes out income protection with a 4-week waiting period.
If Sarah falls ill for 3 weeks:
- She receives full sick pay.
- She does not receive income protection.
- This is because her waiting period has not ended.
If Sarah is off sick for 10 weeks:
- She receives full sick pay for the first 4 weeks.
- Her income protection may then start from week 5.
- This helps support her financially for the remaining weeks she is unable to work.
Can Income Protection Pay at the Same Time as Sick Pay?
Some income protection policies allow payment to start immediately or within a short waiting period.
However, if your employer is already paying sick pay, the income protection insurer may reduce your payout to avoid double payment.
This is called an offset.
It is important to check your policy terms carefully, especially around:
- Waiting periods
- Sick pay overlap
- Offsets
- Maximum benefit limits
- State benefit treatment
- Policy exclusions
What About State Benefits?
If you are off work with a long-term illness, you might also be eligible for state benefits such as Employment and Support Allowance.
However, the rules can be complex.
Important points to understand include:
- Income protection payments usually do not affect sick pay from your employer or SSP.
- Some income protection policies may require you to claim state benefits to maximise support.
- Receiving income protection payments can impact means-tested benefits.
- Eligibility for state benefits can change depending on your circumstances.
State benefit rules can change frequently, so it is best to check the government website or speak to a benefits adviser.
Why It Makes Sense to Have Both
Many people assume that sick pay or state benefits are enough.
In reality, these safety nets can have limits. Income protection insurance can help fill the gaps.
Key Benefits of Having Sick Pay and Income Protection
| Benefit | Why it matters |
|---|---|
| More income support | SSP may be much lower than your normal earnings |
| Longer protection | Sick pay may stop after a few weeks or months, while income protection can last longer |
| Better planning | You can match your waiting period to your employer sick pay |
| Peace of mind | Financial support can help you focus on recovery |
| Support for self-employed workers | Self-employed people usually do not receive employer sick pay |
Real-Life Example: James, Self-Employed Builder
James is a self-employed builder in Manchester.
He does not receive employer sick pay because he runs his own business and cannot afford to stop working.
James buys income protection insurance with a 4-week deferred period.
If James breaks his leg and cannot work for 12 weeks:
- He gets no employer sick pay.
- After 4 weeks, his income protection starts paying.
- His policy pays 60% of his average income for the remaining 8 weeks.
- This helps James cover rent, bills and living expenses while he recovers.
Practical Tips When Considering Income Protection and Sick Pay
Before choosing income protection, it is useful to review your current sick pay position.
Here are some practical steps:
- Check your employer’s sick pay policy.
- Find out how much sick pay you would receive.
- Check how long your sick pay would last.
- Choose a waiting period that works with your sick pay.
- Review your monthly budget.
- Work out how much income you would need to replace.
- Check policy exclusions and definitions of illness or injury.
- Keep documentation ready if you need to make a claim.
- Review your cover after major life changes.
Questions to Ask Before Choosing Cover
| Question | Why it matters |
|---|---|
| How long would my employer pay me if I was off sick? | This helps you choose the right waiting period |
| Could I manage on SSP alone? | SSP may not cover normal monthly bills |
| How long could my savings last? | This shows how much financial backup you already have |
| Am I employed or self-employed? | Self-employed people usually have fewer sick pay options |
| What monthly expenses must continue? | Mortgage, rent, bills and family costs still need paying |
| What exclusions apply? | Every policy has terms, conditions and exclusions |
Final Thoughts
If you are worried about losing income during illness or injury, having both sick pay and income protection insurance can offer a stronger safety net.
Sick pay can provide short-term support.
Income protection can offer longer-lasting financial security if you are unable to work for a longer period.
Together, they can help protect your finances and give you more peace of mind while you focus on recovery.
Speak to BSL Assured About Protection Insurance
At BSL Assured, we understand how important protection insurance is for your financial wellbeing.
Whether you are employed or self-employed, we can help you explore options for:
- Income protection
- Life insurance
- Critical illness cover
- Mortgage protection
- Family protection
Our aim is to help you understand your options clearly, so you can make an informed decision.
Get in touch with BSL Assured today for guidance on protection policies that may suit your needs.
Protect your income. Protect your home. Protect what matters most.
This blog is for information purposes only and does not constitute regulated financial advice. Cover is subject to eligibility, underwriting, exclusions and policy terms.