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Long-term illness or disability

Having a long-term illness or disability, or caring for someone who has, can have major effects on your financial situation. You have to cope with the emotional and psychological impact that the disability or long-term illness has on your life. On top of this, you may find yourself struggling with the twin challenges of meeting extra costs that you incur in order to manage the illness or disability while also facing a reduction in income if you can no longer work or need to reduce your hours.

This section aims to help you consider the financial implications of having a long-term illness or disability and gives you guidance on how to maximise your income and manage your money.

Step 1: Where your money can come from

Staying in employment

Work is an important part of many people’s lives – as well as the money, many of us enjoy working and get a sense of identity, fulfilment and social interaction from our jobs. Many of us assume that, if we are diagnosed with a long-term illness or disability, we will have to give up work. However this is often not the case.

If you have a long-term illness or disability and are concerned about your ability to stay in your job, get as much information and advice as you can about your particular situation and the options available to you, including adjustments to make it easier for you to manage your work, alternative employment or retirement.

Talking to your current employer is the first step. Hopefully they will be sympathetic and will help you find ways to overcome any particular difficulties that you are experiencing. If they are unhelpful or put pressure on you to resign or take alternative less well-paid job, you may be able to take action under the Disability Discrimination Act 1995. This makes it unlawful for employers to discriminate against you at work because of your disability. If you are disabled, you also have rights in many other areas of your life including:

The Directgov (link opens in a new window) webite has more information on this.

If you need advice – whether or not you are currently working or not – your local Jobcentre Plus (England, Scotland and Wales) or local Jobcentre/Jobs and Benefits Offices (Northern Ireland) can put you in touch with one of their Disability Employment Advisers. Depending on your needs, they may be able to offer you:

Financial help may also be available through the welfare benefits system to help you meet the costs of travel to work or purchase any pieces of equipment that you need to retain or obtain employment.

Trade unions, staff associations and professional organisations attached to your occupation may also be able to provide support and advice. The Equality and Human Rights Commission's website has more information about disability discrimination (link opens in a new window) .

Retiring on medical grounds

You may decide to retire early because of your illness or disability. If so, your money will need to come from elsewhere – for example, through a pension, insurance policies, savings and investments, benefits or grants.

Pensions

Are you part of a company pension scheme (also called an occupational pension scheme) or do you have a personal pension? If the answer is yes, there may be special provisions in the scheme to help you or let you access your savings early. Each pension scheme is different so it is important to talk to your employer or the scheme’s operator.

The Pensions Advisory Service (link opens in a new window) website has more information on this. 

Also see Pensions.

Insurance policies

Are you covered by any insurance policies that may pay out because of your illness or disability?

Savings and investments

Do you have any savings and investments that you could use?

Benefits

There are many benefits that may be available to you, depending on your situation. See the section for People who are Sick or have a Disability.

The Turn2us Benefits Checker can help you find out what you might be entitled to.

Grants

As well as any financial assistance that may be available to you through welfare benefits, you may qualify for help from a grant-giving organisation. See the Grants section.

Step 2: Where money goes

As well as the usual living costs that everyone has to deal with, you may need to find extra money to pay for expenses linked to your illness or disability. These can include:

• Medication
• Special diets
• Travel costs
• Childcare costs
• Alterations to your home
• Care costs
• Extra heating costs

If you need help paying for these, there may be benefits or grants available. See People who are ill or have a disability.

See Budgeting for some useful tips.

Step 3: When money does not go far enough

Some people with long-term illnesses or disabilities and their carers do experience problems with debt. This may be because they are unable to cope with extra costs or find it difficult to manage on a reduced income. See Managing Debt.

Step 4: Information on Financial Services

If you have a long-term illness or disability, in most cases you still have access to financial services such as mortgages, loans and credit cards. The problem you are likely to encounter is that many financial services come with insurance protection and you may find it difficult to get this cover at a reasonable price. An example of this is applying for a mortgage. As part of your mortgage application, you do not have to disclose your illness or disability but your mortgage provider may insist that you take out insurance cover.

Insurance is a way of protecting yourself financially if something goes wrong. It works like this:

• You pay instalments of money – known as premiums – to an insurance company to protect ourselves financially if something happens, for example your car is stolen, your home burns down or you get ill.
• If the worst comes to the worst and whatever it is you have insured against happens, your insurance company pays an agreed amount of money.

Insurance companies decide how much you pay as a premium according to how likely it is that whatever you are insuring ourselves against will happen. This can cause problems if you have a long-term illness or disability when you try to take out some types of insurance – for example, travel, life or health insurance. Some people who have a long-term illness or disability can experience difficulties when trying to obtain an insurance policy because:

• An insurance company might think they are more likely to claim so may charge higher premiums or limit the cover offered
• They might think it is too risky to insure them so turn down the application.

See Insurance

Step 5: Would you like to know more?

See the following sections on the Turn2us website:

Last updated: 15 June 2009