The arrival of the colder months means preparing for Christmas, thinking about your new year resolutions, and planning to battle illnesses.
Whether you’re ill for a few days or you’re diagnosed with a long-term condition, needing to take time off work can have a financial impact. While you can’t predict when you’ll fall ill, there are some steps you can take to limit the effect it has on your finances.
A September 2025 report from CIPD found that the average UK employee took almost two full working weeks of sickness absence in the last 12 months. The number of sick days is a record high and represents a 62% increase compared with pre-pandemic levels.
Fortunately, most sickness absences are short-term, and people make a full recovery. However, there are times when people need to take an extended period off work. At a time when you should be focusing on your health, being unable to work could put your finances under pressure.
Reviewing your financial safety net before you fall ill could provide peace of mind and identify any gaps. Here are three steps to take to prepare for illness.
Step 1: Calculate what pay you’d receive if you’re unable to work
If you’re an employee and earn at least £125 a week, you’ll usually be entitled to Statutory Sick Pay (SSP) if you’re ill for more than three days in a row. SSP can be a useful boost to your finances if you’re ill for a short period.
However, it’ll only be paid for up to 28 weeks and might run out if you’re dealing with a long-term illness. In addition, for 2025/26, SSP is £118.75 a week, so it’s often not enough to cover your outgoings alone.
Your employer may also provide an enhanced sick pay policy, which varies between businesses. When reading your contract or speaking to HR, be sure to check what portion of your income you’d be paid and how long you’d receive sick pay.
Step 2: Establish an emergency fund
Once you know what you’d receive, you can assess how much to keep in an emergency fund to cover short-term illnesses.
Your emergency fund should be readily accessible, such as a savings account. A general rule is to have six months of essential outgoings in your emergency fund.
Depending on the income you’d receive when ill, you may adjust this amount to suit your needs. For instance, if your employer would provide you with your full income for three months, you might feel comfortable having a reduced amount in your emergency fund.
Step 3: Assess your financial protection
While an emergency fund could provide a way to cover your expenses if you were ill for a few months, what would happen if you needed to take a year off work, or were unable to return to work at all?
Appropriate financial protection could provide a solution.
Financial protection would pay out when certain conditions are met. When preparing financially for unexpected illnesses, there are two main ones to consider – income protection and critical illness cover.
Income protection would provide you with a regular income if you’re unable to work due to an accident or illness. The payout is usually a portion of your salary, and it would continue until you return to work, retire, or the term ends.
The regular income can be used however you wish, including to meet your day-to-day expenses while you can’t work.
Critical illness cover would pay out a lump sum if you were diagnosed with a covered illness. Again, you can use the money you receive how you wish, from paying household bills to adapting your home in light of your diagnosis.
Not all illnesses are covered by critical illness cover. Be sure to read the paperwork thoroughly before going ahead to understand how comprehensive it is and whether it’s right for you.
Workers with dependents might also want to consider life insurance. This would pay out a lump sum to your beneficiaries if you passed away during the term.
Going back to step one to understand what financial pressure you could face if you were ill for an extended period can help you assess whether you have sufficient cover or might benefit from additional protection.
Contact us
If you’d like to discuss financial protection or how your finances would cope if you were unable to work, please get in touch to arrange a meeting.
Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
