No one plans to have a mental health breakdown. However, life brings challenges and no one is immune to poor mental health. If that happens, the reality is that 300,000 people every year with a long term mental health problem lose their jobs¹ and people with a mental health condition are three times more likely to have a long term period of sickness². Income Protection Insurance can be a crucial financial lifeline.
This is not the place for a debate on the welfare state and the current benefits system in the UK. However, it is not controversial to say that if you are unable to work for a long period because you have poor mental health the personal financial impact is liking to be very significant.
What is Income Protection Insurance?
Put simply, Income Protection Insurance is an insurance policy that pays a replacement income if you can’t work because of disability or illness and your paid sick leave is finished. There are of course different criteria and different cover for different policies. Some important differences are:
- some policies might be “own occupation” (you are covered if you can’t do your specific occupation, even if you could do other paid employment) while others might only provide cover if you can’t work at all;
- different policies have different “deferred” periods – the amount of time that you have to be unable to work before you receive a payment; and
- some policies might provide “lifetime cover” (payments are continued for as long as you can’t work until you reach retirement age) while others might be for a limited period of say 2, 4 or 5 years.
But these insurance policies never pay out and are a rip off aren’t they…
The PPI scandal has generated a lot of cynicism about insurance. The reality is, however, that in 2016 85% of Income Protection Insurance policy claims were paid. This is higher than the 79% of payments of household insurance claims paid out.³
Of course there are problems with Income Protection Insurance policies being unfairly and incorrectly declined. At Bilantia we are in fact seeing a worrying increase in claims being declined for mental health illness. However, if this happens we can help you! At Bilantia we have successfully helped clients whose income protection insurance claims for mental illness have been declined unfairly.
How can I get Income Protection Insurance?
You might be pleasantly surprised to find that you can get it through your employment. It might be provided as part of your benefits package – make sure to check if it’s something you have automatically or if you have to opt in for it. If you can get it through work, check the details of the policy to make sure it would provide you with enough cover. If you’re self-employed you’re also able to get cover.
If you don’t get it through work, or the work cover isn’t sufficient – there are a number of companies which provide this insurance and you should shop around like you would do with any other insurance. Be aware when doing this of any exclusions for pre-existing conditions. If you have already been given a diagnosis of a mental health condition it is important that this is disclosed properly.
Any other insurance I should think about while I’m there?
Funny you should ask. Yes (we’re big fans of insurance at Bilantia).
Some household insurance policies cover legal expenses when you have a dispute with your employer. This could help you if your employer does not treat you well if you are unable to work because of poor mental health. It’s worth checking your household policy to see if this is included and, if not, think about getting it added or chose a policy that does include it.
It could be helpful to consider whether mortgage payment protection insurance could be a valuable protection for you.
It is also worth thinking about private health insurance cover to pay for mental health treatment. Again, this is not the place to debate the pros and cons of the NHS. But the reality is that treatment for mental illness of the NHS is often far from ideal and private treatment is expensive. The cover for mental health treatment will have limits under private health insurance, but it is likely to provide a decent amount of treatment. It will often pay for a significant number of therapy sessions, psychiatric support and will often provide cover for in-patient treatment for serious mental ill health. Private health insurance also might be included in your employment benefits package and it is worth checking.
Is it really worth thinking about this – insurance is so boring
YES!! The very first question I ask someone who comes to me when they are really struggling at work, or are completely unable to work, is what insurance do you have? Having income protection insurance and private health insurance can make a very significant difference – it can give people the space to properly address their mental ill health.
Insurance cover is indeed not perfect, and one of the things we do at Bilantia is help people when their insurance cover is not being properly paid – but even having seen what we’ve seen we strongly recommend that everyone gives detailed and considered consideration to what their financial situation would be if they found themselves unable to work because of mental ill health, and how insurance could be a very important way to protect themselves financially.
If you are currently suffering mental ill health and are having problems with income protection insurance or other insurance issues, please reach out and see if we can help you. Call us on 0798 480 5351 or email us at firstname.lastname@example.org. We have consulting rooms in London and Brighton and can consult online to anywhere in the world. Click here to see some of the ways in which we can help you.
Nicole Shinnick is the Founder, Managing Director and a Lead Consultant at Bilantia. Before founding Bilantia, she spent six years as a Senior Ombudsman at the Financial Ombudsman Service making legally binding decisions
on insurance disputes.
1 Deloittes, 2017, Mental Health and Employers: The Case for Investment
2 Department for Work and Pensions, 2016, Work, Health and Disability Green Paper: Data Pack
3 Association of British Insurers, 2016