Articles - Ever more need for protection

I, Daniel Blake won Best British Film at the BAFTAs, but did the film reflect reality? The film is about a carpenter who can no longer work and is confronted by a complex, online world as he tries to gain State disability benefits. What is the reality of life on State disability benefits and are things about to get much worse for those who try to claim?

 By Paul Avis, Marketing Director, Group Insurance Canada Life

 Since 2010, the assessment process has been continually cited as unfit by Citizens Advice. Around half of all those who are turned down successfully appeal their decision.

 The application process is complicated: form ESA1 comprises 56 pages that need review and completion, and ESA50 is a further 21 pages. For someone with mental health issues, this would clearly be a barrier. Is it worth doing for the amount you may get back in benefits?

 From 6 April 2017 applicants for Employment and Support Allowance (ESA) who are assessed as unfit for work but capable of work-related activity will receive a lower level of State benefit. This is equivalent to Jobseeker’s Allowance, with the value falling from £5,312 to £3,801 per year. Can anyone really live on this? Group Income Protection (GIP) could be the most important benefit any employer will purchase on behalf of its employees.

 Additionally, the benefit cap reduced from 7 December 2016. Previously it was £500 per week for single parents and couples and £350 per week for single people. The total amount a couple or single parent can now receive in benefits is £442.31 a week (£23,000 per year) in London, or £384.62 a week (£20,000 per year) elsewhere.

 Furthermore, from 1 April 2018 new Support for Mortgage Interest (SMI) payments will be paid as a loan, repayable upon a claimants’ return to work or sale of the house. This follows earlier limitations to the program. Housing benefits are currently the only element of State support that GIP is means tested against, but will also come under a ‘nil earnings’ rule from April 2018, so it won’t be paid if individuals are in receipt of GIP benefits or have savings of over £16,000.

 State Bereavement Support and Charges
 State support for bereavement has fallen by £5.2billion since 2003 and a further £45m will be saved by 2019. The current system of bereavement benefits, including Bereavement Payment, Bereavement Allowance and Widowed Parent’s Allowance, will be replaced with a new single Bereavement Support Payment for new claims from April 2017.

 The new system will focus support on the 12 month period immediately following the bereavement in a bid to cover the additional costs of bereavement. Age will no longer be a factor in determining eligibility and National Insurance contribution conditions will be simplified to make entitlement easier to understand. Bereavement Support Payment will not affect Universal Credit entitlement and will not be included within the Benefit Cap unlike the previous arrangements.

 When a parent dies, families currently receive a one-off, tax-free lump of £2,000 and a taxable weekly benefit of £111.20 per week paid until the youngest child ceases to qualify for Child Benefit. From April 2017 the lump sum will increase to £3,500 but the ongoing payments will be limited to £350 per month for just one year. It is estimated that 88% of working families will be worse off as a result.

 So while State benefits are reducing for support, charges on death are increasing! The Government has also proposed a new tiered system of probate fees in England and Wales, which could result in some paying as much as £20,000 for estates worth more than £2m. This works out at a 9,202% rise in fees for what has been described as a simple, administrative exercise.

 Insurers offer Group Life Assurance (GLA) and in addition to the financial benefits, most also offer Bereavement Counselling and Probate Helplines, helping dependents and survivors to cope emotionally and practically with the death of a loved one. Death in Service, or Spouses’, Pensions can provide an ongoing income (in addition to lump sum benefits), for partners or the mutual children of the affected couple.

 If you have not considered them before, consider GIP and GLA! The alternative is if you are long term sick and want to continue to live in the style to which you have become accustomed, or a family member dies and you want to bury them with the respect and dignity commensurate with their quality of life, the State will only provide minimal support.

 Protection insurance is the only real option to give you and your colleagues any real support in an ongoing period of reductions in State support. With costs starting at 0.1% of salary for GLA and 0.25% of salary costs for GIP, budget protection options mean that price is certainly not a barrier to an opportunity for great peace of mind, improved retention and stronger attraction for new staff.

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