Could you afford to miss your next pay cheque?

In this day and age, it’s likely that you’ll have all sorts of bills and expenses to pay, and so you’ll depend on your monthly income to be able to make the payments. But what happens if your next pay cheque doesn’t come? This can happen for all sorts of reasons – for example, injury, sickness or redundancy – and means that you’ll be left to shoulder the financial burden without any income.

It’s a potential situation that can understandably cause anxiety, especially if you’re the breadwinner in your household. But don’t worry, there are steps you can take to make sure you’re not left in the lurch if you develop illness or are involved in an accident that forces you to stop working for a time. Let’s take a look.

Presently, you may be in good shape, with no illness or injury to speak of. But the unfortunate thing is that that can change at any moment – it doesn’t matter how healthy you are. If you’re involved in an accident while on holiday, for example, it could result in injury that means you can’t work for a long time.

Statutory Sick Pay (SSP) in the UK is paid at £123.25 a week or 80% of your average weekly earnings (whichever is lower) for up to 28 weeks. But if you’re out of work for longer than that, you’ll need something to make up for your loss of income.¹

Of course, you may not be involved in an accident or develop illness at all – you may be made redundant from your job. Hopefully you’ll be able to find work again quickly, but the job market is volatile, and if you’re struggling to find a new position then you’ll need some kind of income to tide you over.

You may have savings that you can use to pay any expenses or bills while you’re not working, so this can keep you going in the interim. You may also be able to count on family support if you’re needing help with outgoings. But if you can’t rely on family support or savings, you may need a different solution.

This is where accident, sickness and unemployment (ASU) insurance can help. It covers you for sudden accidents, unexpected short or long-term illnesses, and involuntary redundancy or job loss, so you can still receive an income while you’re not working.

It’s a short-term income protection policy that pays a tax-free monthly percentage of your gross salary if you can’t work. It kicks in after a deferred period that tends to match your employer’s period of sick pay. However, make sure to check what your employer offers in the way of sick pay and redundancy packages so you’re not paying for insurance that you don’t need.

Be aware that ASU insurance doesn’t cover you for voluntary redundancy, resigning, being fired for misconduct, pre-existing medical conditions, or knowing that your job was at risk when you applied.

Sources:

1. Work out your employee's Statutory Sick Pay manually - GOV.UK

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