How a serious illness can affect your finances
A serious or terminal illness often means working less or stopping work altogether. A loss of earnings can make it harder to cover rent or mortgage payments, bills and everyday costs, even if you have savings.
Help may come from insurance you already hold, your employer, state benefits and charities. Checking what support is available early may help you avoid gaps in income.
Insurance, employer cover and pensions
Check any policy documents you have, or ask someone you trust to help. You can also contact the insurer directly.
Terminal illness cover: this is often included in life insurance. Many policies pay out if you are expected to live less than 12 months, but the insurer must accept that the policy's definition and conditions are met. Some policies restrict claims near the end of their term. This is normally an early payment of your life cover, so nothing may be left to pay after death.
Critical illness cover: this pays a lump sum if you are diagnosed with a condition listed in the policy, such as certain cancers, heart attack or stroke. Your illness need not be terminal, but it must meet the policy's exact definition and severity requirements. Survival periods and exclusions may apply.
Income protection: this pays a regular amount, usually a share of your earnings, if illness stops you working. Payments normally start after an agreed waiting period.
Mortgage or payment protection: this may help with mortgage or loan repayments.
Group income protection through your employer may provide income while you are ill. Death in service benefit normally pays out only after death. Leaving your job can affect employer-linked cover, so check before you resign.
Some pension schemes offer ill-health retirement. A separate option, a serious ill-health lump sum, may be possible if you are expected to live less than a year. It is not always tax-free: that depends on your age, allowances and scheme rules. Get guidance before withdrawing pension money or deciding how to use an insurance payout, as lump sums can affect tax, means-tested benefits and provision for dependants.
Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.
Sick pay and benefits
Eligible employees can get Statutory Sick Pay, generally for up to 28 weeks, and some contracts offer more generous sick pay. Check the current SSP rules on GOV.UK. You may also qualify for benefits while receiving sick pay, depending on your circumstances.
Personal Independence Payment (PIP): new claims are for people aged 16 to below State Pension age whose illness affects daily living or mobility. It is not means-tested and can be paid while you work. In Scotland, Adult Disability Payment has replaced PIP.
Attendance Allowance: for people at or above State Pension age who need help with personal care or supervision to stay safe. In Scotland, new claims are for Pension Age Disability Payment.
Universal Credit: means-tested help with living costs, including rent, for people out of work or on a low income. Savings and a partner's circumstances are taken into account.
New Style Employment and Support Allowance: for people whose illness limits their ability to work and who have paid enough National Insurance. A partner's earnings and household savings generally do not count, though pension income can. It is not usually paid alongside SSP, but you can apply before SSP ends.
You can claim under the ordinary rules without a terminal prognosis. If you are likely to have 12 months or less to live, special rules for end of life apply to DWP and Northern Ireland claims. A doctor or appropriately qualified registered nurse can complete an SR1 form to support your claim. Scottish disability benefits use a definition based on clinical judgement, with no fixed time limit, and a form called BASRiS. You may still need an SR1 in Scotland for Universal Credit or New Style ESA.
Special rules mean faster decisions, normally no health assessment and no qualifying period. PIP is normally paid at the enhanced daily living rate, with mobility considered separately, and Attendance Allowance at the higher rate. Income, savings, residence or National Insurance conditions may still apply.
In Great Britain, ask your council about Council Tax Reduction; in Northern Ireland, ask about help with rates. A carer may qualify for Carer's Allowance, or Carer Support Payment in Scotland, depending on the care given, their earnings and the benefits of the person cared for. These can affect other benefits. Social Security Scotland and nidirect cover their own rules.
Where to get help
A family member or friend can help with forms or contact organisations with your permission. If you cannot manage your affairs, a formal arrangement such as becoming a benefits appointee or holding power of attorney may be needed.
These organisations provide free information, guidance or advice. The help available varies.
Citizens Advice: benefits, debts and dealing with lenders.
Macmillan Cancer Support: benefits advice and help finding financial support for people with cancer.
Marie Curie: support for people with any terminal illness and their families.
Turn2us: a benefits calculator and grants search. Grants may depend on your occupation, location, diagnosis or finances.
MoneyHelper: government-backed guidance on money, pensions and debt.
If bills or mortgage payments are a struggle, contact your lender or supplier early. Payment breaks are not guaranteed, interest may continue and your credit record may be affected, so ask what any arrangement costs and get free debt advice.
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