A new report by protection specialist LV= reveals that 17.5 million UK adults in full time employment are unaware of the changes that the Welfare Reform Act has brought about, after new legislation replaced Incapacity Benefit with Employment and Support Allowance (ESA).
One fifth of employees say they do not know how much they would be entitled to receive under the legislation. One in ten employees say they do not expect to receive any financial assistance from their employer. This equates to millions of people who could come under serious financial pressure if they were unable to work for a sustained period, either because they don't know how much they would receive from their employer or because they expect to receive nothing. Just one quarter of employees say their employer would continue to pay their full monthly salary for the whole period that they were unable to work due to long-term illness or an accident.
Chris McFarlane at LV= comments: "It is clear that there is a huge lack of understanding among employees around the new changes announced by the Government. The Welfare Reform Act has completely redesigned what financial support could be available to people if they were unable to work, and no one should assume that the State would support them and cover their regular financial commitments. In the current economic climate protecting your income in the event of being unable to work for a sustained period of time is more important than ever. Too many people are unaware of what they would receive from their employer or from the Government if they were unable to work. Cover can be very affordable and even the equivalent of £6 per week can go a long way towards providing a reasonable level of protection, giving peace of mind."
The LV= research also shows that one quarter of adults in full time employment do not have any savings to fall back on if they were unable to work. And one third admit that they could not survive for more than two months on their current savings if they were out of full time work.
Under the new ESA, which replaced Incapacity Benefit, people who are able to undertake some form of work-related activity will receive a maximum weekly payment of £84.50.
Income protection insurance: News update: November 2008