Accident and illness: Belgians are too optimistic about their income

A survey by Vlerick Business School finds workers seriously overestimate the statutory incapacity benefits they could receive

  • Two in three workers overestimate the amount of social security benefits they would receive during the first year if they were unable to work for a long period of time.
  • Eight in ten workers would also expect their standard of living to suffer if they were unfit for work, while one in three even believe they would face financial problems.
  • Insurance to protect against loss of income is therefore generally considered worthwhile. More than 90% of workers would strongly welcome guaranteed income protection insurance offered by their employer as part of their overall salary package.
  • Despite the strong demand for this type of cover, employers who offer it remain a minority.  

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Maternity leave, burn-out, an accident or serious illness are among the many potential causes of an extended absence from work. But what about the financial implications? And what role do employers play? In association with AG Insurance, Vlerick Business School recently conducted a survey into the way in which private sector employees and public sector contract workers assess the risk of losing their capacity to work. Professor Xavier Baeten questioned people about their experiences and personal expectations and the role they feel employers should play.

Workers overestimate statutory work incapacity benefits

People who know what it is like to be unable to work understand only too well the problem of a drop in income. During the first month, employers generally still pay workers their full salary. From month two, however, the amount of benefit paid by the social security system already falls to 60% of gross pay (except following a workplace accident). The survey carried out by Vlerick show that 2 in 3 workers believe payments are made at a higher rate. In some cases, the actual benefits paid during the first year amount to half of what workers questioned thought they would receive. Still 55% of all workers overestimate also the benefits received after one year of absence.

In particular, it seems there is little knowledge of the cap on incapacity benefits: in order to calculate the amount of benefit paid, a person's gross monthly salary is capped at approximately EUR 3,700. Any salary paid above this limit is disregarded. This means that the loss of income increases gradually for claimants earning more than EUR 3,700 per month.

Are statutory benefits a threat to current living standards?

The survey shows that workers are fully aware of the risk that they could become unable to work. No less than 60% of those questioned said they expected to go through a period of incapacity at some point in their career.

Furthermore, Belgians appear somewhat pessimistic about the financial implications of an inability to work, with eight in 10 respondents indicating that statutory incapacity benefit alone would not be enough to maintain their current standard of living. One in three even stated that the situation would inevitably cause financial difficulties. This category especially concerns workers whose monthly salary is below the cap of EUR 3,700.

Employees looking to their employers

More than 90% of workers say they would greatly welcome the inclusion of guaranteed income insurance in their package of employee benefits, as it would provide a further monthly payment in addition to those made by the social security system. Fifty-five percent of workers even believe that employers have a responsibility to offer this kind of work-related insurance policy. The advantage this would bring is especially welcomed by workers earning salaries below the average for Belgium; this is probably because should the worst arise, these individuals do not have sufficient financial reserves to see them through.

The interest of workers is therefore indisputable: if they had the opportunity to decide on the distribution of their own non-statutory benefits, 94% say they would devote a share to an income protection insurance policy.

Strong demand but limited success

Nevertheless, this strong demand has not yet been met by a suitable offer. In the private sector, only four in 10 employees questioned said their overall salary package included a guaranteed income protection policy, and the figure is as low as 13% for public sector contract workers.

Professor Xavier Baeten says: "Our study shows that people tend to overestimate statutory incapacity benefits, but it also shows that they believe their standard of living would suffer if they were to become ill or have an accident. Yet if we consider that many workers do not have any additional insurance to protect them, it seems clear that there is still huge potential in this area for employers who also wish to be what is known as a 'caring employer'."

Jean-Michel Kupper, Managing Director, AG Employee Benefits/Health Care, adds: "In practice, we also find that guaranteed income protection insurance is still largely the preserve of those in senior positions. This is the case even though the importance of this type of insurance cover for society is increasingly clear, in particular because it provides supplementary care and treatment for psychological conditions such as burn-out, for example, and therefore helps workers recover and return to work more quickly."

* Online survey of 1,984 respondents conducted from 7–26 September 2018 on behalf of Vlerick Business School and AG Insurance. Media partners: La Libre Belgique and De Standaard

AG InsuranceAbout AG Insurance
With a market share (end 2017) of 28.4% in Life and 15.9% in Non-Life, AG Insurance is the leader in the Belgian insurance market. AG Insurance distributes its products through different channels so that each customer is served in the way that suits him: through independent insurance brokers and Fintro agents, through the offices of BNP Paribas Fortis and Bpost bank and through group insurance for large companies. AG Insurance has more than 4,000 specialised employees.

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