Nine in 10 employees ‘underestimate chances of being unable to work’

Posted on: August 25th, 2016

Many would rather ‘take the risk’ than pay for income protection

UK employees are underestimating how common it is to be unable to work due to serious illness or injury, according to research from Canada Life Group Insurance.

Nine in 10 (89%) UK employees believe the number of people off work for more than four weeks due to illness or injury each year is between 1,000 and 100,000.

But the Association of British Insurers estimates this figure is around one million.

The survey found more than three in five (61%) employees do not have any form of income protection (IP).

More than a quarter (27%) of those without a policy said they would rather take the risk and 18% thought they will never need IP.

Canada Life said that with most employees underestimating the chances of illness of injuring happening to them, 45% of workers could be taking a bigger gamble than they realise.

The survey results are despite recent media coverage following George Osborne’s Budget proposals leading 42% of employees to believe there is going to be less funding for State benefit provision.

In addition, a third (32%) said recent media coverage has made them think State benefits will be harder to successfully qualify for.

Despite hoping they will never need it, 31% of employees without IP would be worried about how to survive financially in the event of an injury or illness that prevents them from working, rising to 45% of workers with two children.

Cost is the primary factor for not taking out an income protection policy, with 44% of employees saying they are unable to afford it.

If employers provided group income protection (GIP) or group critical illness (CI) cover, 43% of respondents said they would feel more valued, 41% would be relieved their income was protected and 29% would be more likely to stay within their organisation.

Half (50%) of employees agreed it would be very important for them to get back to work as quickly and as safely as possible, with financial reasons the most important factor (62%), while around a quarter (23%) also said they would get bored without a job.

Paul Avis, marketing director of Canada Life Group, said the argument that loss of income through injury or illness “won’t happen to me” highlights a lack of understanding among UK employees.

“Growing concerns over the provision of State benefits could force GIP higher up the corporate agenda. Recent media coverage means State benefits are perceived as being harder to apply for and receive, with less funding available,” he said.

Separate research suggests six in 10 (60%) people do not believe the Welfare State can be relied upon to support those in need.

“Additional benefits like GIP make a benefits package stand out at a time when all employers are now – or will soon have to – offering pensions through auto-enrolment. Our research shows employees who are offered GIP feel more valued and are more likely to stay within their organisation, making this a highly valuable retention tool,” Avis said.

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