It is logical that, as workers, we want to know and exercise our rights if necessary. Sick leave insurance is one of them, and probably one of the most well-known, although we may not be fully aware of it. It is important to be aware that we have responsibilities as employees, which should be reciprocated in the form of rights that we must exercise and request. However, in order to do so, we first need to be well-informed about them.
That is why today we want to begin with one of them and explain both when this type of insurance can be requested and the necessary requirements and its characteristics. In these cases, we recommend always having professional advice, but let’s first go over the basic principles.
What is sick leave insurance?
Before starting with the requirements, it is important to clarify what this type of insurance consists of. This policy guarantees the income of a worker during a period when they are unable to perform their work due to illness or injury. Therefore, it is designed to complement the coverage of social security, ensuring additional financial compensation in the case of temporary disability, which helps cover personal and family expenses that may arise during the sick leave.
Sick leave insurance is primarily aimed at individuals who want to protect their income in the event of sick leave due to illness or injury. Although any worker can benefit, there are certain groups that are usually the main interested parties:
Self-Employed Workers
This group of workers does not have access to the same sick leave benefits as salaried employees. Social security only covers a portion of their income (based on their contribution base), which is usually not enough to maintain their standard of living. This type of insurance provides them with an additional source of income. In this way, they can maintain their personal finances and continue paying their professional or personal expenses without compromising their economic stability.
Self-employed professionals and business owners
Professionals such as doctors, lawyers, dentists, and others, whose activity depends on their presence to generate income, may face significant losses in the event of sick leave. The insurance covers the income they might lose during the time they are unable to work, in addition to providing some financial peace of mind.
Salaried employees
Although employees receive a temporary disability benefit through social security, it is usually lower than their full salary. In the case of extended sick leave, this can affect their purchasing power. With this insurance, they can cover the difference between what social security provides and their usual salary, preventing a significant decrease in income.
People with financial responsibilities
Those with financial burdens, such as a mortgage, debts, or dependents, can benefit from sick leave insurance, as it ensures a regular income while they are unable to work. It allows them to meet their financial commitments without jeopardising their savings or assets in the event of an unexpected sick leave.
People looking to complement their health or life insurance
People with health or life insurance often seek additional coverage for sick leave. This type complements general coverage by providing an income in the event of sick leave, something that other insurances typically do not cover.
What does sick leave insurance cover?
Sick leave insurance primarily covers a worker’s income when they are unable to work due to an illness or injury that causes temporary disability. However, the exact coverage may vary depending on the type of policy taken out and the specific conditions of the insurance. Let’s take a look at the most common ones:
Income replacement
Sick leave insurance pays a daily or monthly amount to the insured person for the duration of the sick leave. This allows the worker to maintain their income level while they are unable to perform their work. It typically covers a percentage of the salary ranging from 50% to 100%, depending on the policy and the agreed conditions. It is common for this percentage to be complementary to what is paid by social security.
Compensation for temporary disability
If the worker suffers an illness or injury that prevents them from working, the insurance will cover the period of temporary disability, both for common illnesses and workplace accidents (although some insurance policies may not cover workplace accidents if they are already covered by social security). Some policies include the option to cover more serious or long-term illnesses, providing coverage for a longer period than what social security offers.
Coverage for non-work-related accidents
Many insurance policies cover accidents that occur outside the workplace, such as falls, traffic accidents, or sports injuries, as long as they are not related to work activities.
Additional coverage for specific illnesses
Some sick leave insurance policies offer additional or specific coverage, such as:
Cancer or serious illnesses
If the insured person suffers from a serious or terminal illness, the insurance may offer a higher compensation or an extended payment period.
Mental or psychological illnesses
Some policies also include coverage for psychological disorders, which can also lead to sick leave.
Coverage in the event of serious accidents
The insurance also covers the loss of income if the worker is unable to continue performing their usual duties due to a serious accident.
Waiting or exclusion period
Some policies include a waiting or exclusion period, which is the time that must pass from the start of the sick leave until the insurance begins to pay. This period can vary, but it is usually between 7 and 30 days. There are also policies where pre-existing conditions may be excluded from coverage during an initial period.
Supplement to social security
Sick leave insurance usually covers the difference between what social security pays and the worker’s usual salary. Social security typically covers between 60% and 75% of the base salary, depending on how long the worker has been contributing. The insurance supplements this amount, helping to maintain the full salary or a larger portion of it.
Duration of coverage
It varies depending on the insurance and the policy. Some offer coverage for an unlimited duration, while others limit the compensation to a specific number of days or months (for example, 12 months or until the worker recovers).
Customised coverage options
Some insurance policies allow for customised coverage by adding clauses or extras that suit the insured person’s needs, such as coverage for specific professional activities or medical advice or rehabilitation.
What are the benefits?
Sick leave insurance offers several benefits for both employees and self-employed individuals, as it provides financial coverage when a person is unable to work for the reasons explained above. In addition to offering relief and easing stress and anxiety caused by such a problem, it can also provide other advantages:
Financial security
The most important aspect is that sick leave insurance ensures the worker maintains an adequate income level while on sick leave due to illness or injury. This is especially important because, in many cases, social security benefits do not cover 100% of the worker’s salary. Many policies allow for supplementing what social security pays, ensuring that the worker receives a higher percentage of their usual salary during the sick leave period.
Reduction of financial stress
During sick leave, financial concerns are often one of the main sources of stress. This insurance helps alleviate them by ensuring that the worker can cover their daily expenses, such as bills, food, rent, or mortgage, without having to rely on their savings.
If an unexpected accident or illness interrupts the ability to work, the insurance acts as a financial lifeline, providing compensation while the individual recovers.
Supplementary coverage to Social Security
Although social security covers sick leave, it generally only covers a fraction of the salary, which may not be sufficient for some individuals. Sick leave insurance helps bridge that gap, maintaining the worker’s purchasing power. This benefit can be especially useful for self-employed individuals, who do not always have access to full disability benefits from social security.
Coverage in cases of serious or prolonged illnesses
Sick leave due to serious or prolonged illnesses, such as cancer or chronic diseases, can last a long time and have a significant impact on the worker’s income. Sick leave insurance ensures that during this long recovery period, the worker will receive financial compensation. This allows the individual to focus on their recovery and well-being without having to worry about losing their source of income.
Coverage for non-work-related accidents
Some sick leave insurance policies not only cover sick leave due to illnesses but also accidents that occur outside of work, such as traffic accidents or sports injuries. This provides broader protection, as any type of unexpected accident can result in temporary incapacity to work.
Access to additional medical services
Some sick leave insurance policies include options for additional medical coverage, such as access to private consultations, medical treatments, or rehabilitation. This can help speed up the worker’s recovery and, in turn, reduce the time it takes to return to their work activity. Medical or physical rehabilitation may be covered in some policies, allowing for a more efficient and quicker recovery.
Protection for self-employed individuals and freelancers
Self-employed workers do not always have access to adequate sick leave benefits. This insurance becomes especially valuable for them, as it ensures they continue receiving income while unable to work. Since they do not have a fixed salary, they are completely dependent on their ability to work. This insurance ensures that they are not forced to deplete their savings in the event of a sick leave.
Policy flexibility
Many sick leave insurance policies allow for adjustments based on the worker’s needs, covering only certain illnesses or accidents, or even adding extra benefits such as medical assistance, rehabilitation therapy, or wellness programs. Some insurers offer insurance specifically designed for high-risk professions or activities that require a high level of expertise, such as doctors, lawyers, or engineers, which enhances the flexibility and usefulness of the insurance.
Ease of access to coverage
In most cases, the process of receiving payments or compensation from sick leave insurance is relatively quick, meaning the worker does not have to wait long periods without income. Depending on the policy, some start covering from the first day of sick leave, while others have a waiting or exclusion period, but they are generally quick in providing compensation.
Peace of mind for the family
If the worker has dependents, sick leave insurance can also provide relief for them, as it ensures that the family’s financial needs will continue to be covered while the worker is recovering.
If you need advice on sick leave insurance or any other type of insurance, whether you’re an individual or a business, you can rely on the services of Ambler. We have been providing comprehensive advice to individuals and businesses since 1991, helping them manage risk because it is part of life itself. Our goal is to protect people and what they have to secure their future, so if you need our services, all you need to do is get in touch with our team so we can provide you with more personalised coverage.
