Furlough end could spark rise in mental illness

Wednesday 29 September 2021

AIG Life Limited has predicted the number of people needing help with poor mental health could increase after the UK government’s Coronavirus Job Retention Scheme ends this week.

The UK life insurance arm of global insurer AIG has suggested that an end to the furlough scheme on 30th September could lead to more people struggling with anxiety and money worries over the coming months.

It believes there is a risk that people will be made redundant when the furlough scheme ends, creating financial pressures on individuals and families. It could also lead to some people struggling to cope mentally with being back in a working environment after more than 18 months at home.

Donald MacLean, Chief Financial Officer at AIG Life, said more people may need to come forward and seek physical help with managing their mental health at a time when the NHS is already stretched, as well as financially if they have income protection insurance in place.


“Living through the pandemic has been tough on everyone’s mental health. All the indications are that employees who were furloughed by their employer were to some degree protected for a time against the financial impact4. This situation changes for some people at the end of this month, so we need to be ready to help when people are brave enough to say they’re struggling with mental illness and they can’t work as a result."

“More people could need help from a psychologist or mental health specialist to get through the anxiety of losing a job and struggling financially when furlough ends, conversely with being back out in the world and at work again, or because the new world of hybrid working means they’re working from home more and have less direct contact with people."

“While people’s mental health seems to have improved since lockdown was lifted, we expect as a protection insurer to see a rise in demand for private mental healthcare support. I would urge any customer who is struggling financially and is worried that they can’t afford their insurance to seek help, get in touch and talk to us about it. We can put them in touch with mental health specialists and there is still some flexibility, for example, to defer paying their insurance premiums until March 2022.”


Furloughing was introduced by the UK government in Spring 2020 to ease the financial pressure on individuals affected by the Coronavirus (COVID-19) pandemic. It covers 80% of an employee’s wage, up to £2,500 a month – 60% is currently paid by the government and 20% by the employer.

HMRC data suggests 1.6 million UK jobs were furloughed by 484,000 employers1. However, the Office for Budget Responsibility (OBR) earlier this year predicted unemployment will rise to 6.5% by the end of 20212 or 2.2 million people3. Which is up from the 4.6% unemployment rate in August announced by the Office for National Statistics (ONS)4.


Seeking better mental health

There is concern in particular about young people who have been hardest hit by unemployment and furlough during the pandemic, especially those who work in sectors such as hospitality.

AIG Life is still seeing a significant number of young people come forward to ask for private help with managing their mental health. Smart Health by AIG, a digital healthcare service delivered by global telehealth provider Teladoc Health and available to AIG Life customers and group scheme members 24/7, has seen demand for appointments with mental health psychologists remain high.

Over 800 people have had more than 1500 mental health consultations via Smart Health in the first six months of this year – 24% more people seeking private help from psychologists than in the whole of 20205.

The ONS also revealed earlier this month that one in five people in the UK had experienced depressive symptoms in the first three months of this year6. An NHS backlog as a result of the pandemic means 1.6 million people are currently waiting for some form of mental health care7.


Paying the bills

If you’re too ill to work, you might continue to receive money from your employer though it will depend on the terms of their sick pay scheme. Some employers provide group income protection as part of your employee benefits.

However, in many cases people may have to rely on statutory sick pay, which is £96.35 per week for up to 28 weeks.

So it’s worth planning ahead and buying income protection from a life insurer. Income protection insurance pays a monthly sum of money to help towards your outgoings if you’re too ill to work.


“My plea is that people don’t suffer in silence if they’re struggling mentally and speak to their life insurer in case they’re covered,” said MacLean. “The purpose of protection insurers like AIG is to help when people really need it. We want to help ease pressure on the NHS and reduce demand for public mental health support, so that society can recover from this life-changing experience."

“We can do that by paying an income protection claim if someone is too ill for work, for example because their mental health is suffering or they have another long-term illness. And we can help them get back on their feet towards good mental health too. Whether that’s by putting them in touch with rehabilitation and mental health specialists, by deferring their insurance payments until next year, or through our health and wellbeing service Smart Health, that comes with all of our protection insurance products and gives individuals access to private mental health psychologists,” added MacLean.


1 Source: HMRC; Coronavirus Job Retention Scheme statistics: 9 September 2021

2 Source: Office for Budget Responsibility; March 2021 Economic and Fiscal Outlook; 3 March 2021

3 Source: House of Commons Library; Coronavirus: impact on the labour market; 19 August 2021

4 Source; ONS; Labour market overview, UK; 14 September 2021

5 Source: Teladoc Health; Smart Health by AIG usage 1 Jan – 30 June 2021

6 Source; ONS; Coronavirus – latest insights: wellbeing; 10 September 2021

7 Source: NHS Providers (representing 54 UK specialist mental health trusts); 30 August 2021