The post you are reporting:
Howard.
Please take note of who I am referring to in my post, it is the vast majority of us who enter the workplace.
Private insurance IS the answer and everyone who is insurable should be expected to have cover, though I would incentivise it (tax relief) rather than make it compulsory.
Specifically I am referring to Income Protection Insurance otherwise know as Permanent Health Insurance (no, not Private Medical - different product all together).
These contracts pay an income tax free if you are unable to work as a result of ill-health or disability after a pre-determined waiting period (this can be 1 day through to a year - the longer the period the cheaper the cover). The waiting period is determined by the insured at outset based on how long they can support themselves if ill from their own resources, which may include periods of employer sick pay.
Benefits are payable until they are well enough to return to work or the pre-determined retirement age on the contract, whichever is first and the benefits can be indexed by RPI/AEI or by a fixed amount. These are also permanent contracts and multiple claims can be made with no new underwriting or terms offered after a first claim.
The best policies pay out if you are unable to perform your OWN occupation and these are better terms than offered by the 'all work' test of long-term incapacity benefit.
There is a maximum benefit based on the principal that you should not be better off by not working than at work and the fact that benefits are payable tax free on personal cover. Maximum claim levels vary between companies from 50% of salary to 65% of salary, employer funded scheme claims are taxable through PAYE, so they offer a 75% maximum cover.
On top of the benefit payment most contracts mean you can have the non-means tested incapacity benefits as well and some contracts either offer insurance to cover incapacity, in case you dont qualify to claim it, or a higher level of cover that deducts incapacity if you are successful in a claim.
The companies that I choose to deal with pay-out on over 90% of claims with the main reason for non-payment being non-disclosure of relevant pre-existing medical conditions. Companies have to reveal all this claims information under the regulations which help people like me target only the best.
Some companies make no loading for occupation but others do, one of the former has only two occupational exclusions, the military and teachers...
These are excellent contracts and if you are young and healthy can be very cheap, particularly relative to the potential benefit payments. A claim on these contracts is something like 16 times more likely than on life assurance before the age of 65.
The government has this week set up a study into making available simplified versions of such contracts to encourage people provide for themselves.