MONEY COMMENT
The High Cost Of Being Ill

By Cliff D'Arcy
April 28, 2003

Some good news for British workers and employers: the number of days lost to sickness has fallen to its lowest level since 1987, according to a new survey from the CBI and AXA PPP healthcare.

However, businesses paid out a whopping £11.6 billion to ill employees in 2002, which comes to £476 per employee. On average, employees were off work for almost seven days in 2002 - around 1 in 33 working days. Firms believe that up to 15% of sick days are down to staff "throwing sickies". However, what is really disturbing is that a third of all time off sick is down to long-term sickness absence.

Thankfully, being off work for more than a few weeks is, for most of us, fairly unlikely. However, for the unfortunate few that do end up in this situation, the damage can be catastrophic: physically, mentally and financially. Here are some tips on what to do if, through accident or sickness, you find yourself off work for more than a few weeks, and how to protect against these risks.

1. Keep in touch: tell your employer when you expect to be back at work and when you are next seeing your doctor, and forward medical certificates and doctor's reports promptly. If you don't, suspicious bosses will assume you're malingering (or even watching sport down the pub!)

2. Check your sickness pay: the most generous firms pay employees for a year or more; others pay only Statutory Sick Pay (SSP). You get SSP if you have been off work for four or more days; the standard rate is a meagre £63.25 a week (around one-eighth of average weekly earnings!) After 28 weeks (or if you don't qualify for SSP), you switch to Incapacity Benefit, which is far more complicated.

3. Check your insurance policies: some employers provide income protection (long-term sickness insurance), although most of us pay for our policies. Often, these policies kick in after your work sick pay ends, typically six months. Also known as permanent health insurance, income replacement insurance and long-term disability cover. Private medical insurance usually leads to faster medical treatment, which speeds up your recovery and gets you earning again sooner.

Payment protection insurance (PPI). If you're off sick (or lose your job), usually for a month or more, PPI covers your repayments on mortgages, loans, cards and other regular commitments . Check your statements very carefully to see if you've paid premiums for PPI. If you can't be sure, call your lender, insurer and broker to double-check. Personal accident cover is another type of insurance that pays out if you are at least moderately injured, but these plans are less popular than PPI.

If your illness is severe (including heart attacks, cancer, strokes and organ transplants), you should make a critical illness insurance claim. Only the most generous employers provide this cover, but millions of us have bought these policies, often linked to mortgages and term assurance cover.

Whatever cover you have, telephone as soon as you think you have a valid claim and establish when it can begin (be warned, health policies normally include LOTS of exclusions.) If you're too unwell to apply, get a friend or family member to do the legwork for you.

4. Budget for debts and savings: if you don't get six months' sick pay from your employer and don't have six month's salary on deposit, long-term sickness will become a desperate financial struggle. As any credit controller will tell you, accidents and illness are major causes of debt problems (along with job loss and relationship breakdown). Start tackling your debts as early as you can - get in touch with your lenders to see if they are willing to freeze the interest and accept reduced payments until you're back on your feet. Visit our Dealing With Debt discussion board for advice from friendly Fools.

If you have savings tied up that you think you'll need to draw on while you're ill, check to see what penalties will apply for early withdrawal, and give notice well in advance for notice accounts and fixed-rate deposits. Unless it's absolutely necessary to tide you over, don't cash in long-term savings plans, although you can withdraw money from cash mini-ISAs.

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