Majority of Finns unprepared for sick leave as benefits cut

By admin On Feb 10, 2025

A new survey by If Insurance reveals that three out of five Finnish workers believe they would struggle financially if forced to take extended sick leave. The results come as Kela’s sickness allowance was cut by 20% at the start of 2024, making financial preparedness even more critical.

The survey, conducted in December 2024 with 1,010 working-age Finns, highlights widespread financial insecurity.

58% of respondents said they would only barely manage—or not manage at all—if they had to cover daily expenses during six months of sick leave. Parents of young children and low-income earners were the most concerned about their ability to cope.

Tero Hoikkala, head of personal insurance at If, noted that the situation is likely even worse than the survey suggests. Only a quarter of respondents knew how much their income would drop during sick leave. Half believed they knew, but many overestimated the amount they would receive from Kela’s sickness allowance.

As of January 2024, Kela’s sickness allowance calculation was revised, cutting payments by an average of 20% for anyone earning at least €2,400 per month. The system is now income-dependent, meaning the higher a person’s salary, the smaller the proportion covered by the allowance.

Sickness allowance typically replaces 40–60% of a person’s salary, with higher earners receiving even less. “Sick leave is becoming more expensive, making financial preparedness more important than ever,” Hoikkala said.

The survey found that 36% of working-age Finns have no financial savings or investments available to cover unexpected expenses. The situation is most severe among those outside the workforce, with 60% lacking any financial buffer.

Among those who do have savings, the average cushion is equivalent to 2.5 months of net income. However, savings levels vary widely, especially based on income. Parents of young children and residents of Eastern and Northern Finland were found to have lower-than-average savings.

Financial experts recommend having savings equal to at least four months’ worth of expenses, but according to the survey, only one in four workers has this level of financial security. “Far too many people have no margin for unexpected financial changes,” Hoikkala warned.

The survey also found widespread confusion about who provides financial support during sick leave. 31% of respondents believed they would receive compensation from unemployment funds or labour unions, even though these organisations do not cover sick leave wages.

Meanwhile, 42% of workers said they prepare for sick leave by saving money in a bank account, and 29% invest as a precaution. However, only one in seven respondents had taken out insurance to cover income loss due to extended sick leave.

The cost of insurance was the main reason people chose not to purchase it. “There is a disconnect between risk perception and financial planning,” Hoikkala said. “Many people invest in health insurance to cover medical costs but overlook the income risk of long-term sick leave or permanent disability.”

If Insurance used Kela’s sickness allowance calculator to estimate the impact of the 2024 cuts at different salary levels:

€2,000 monthly salary – No reduction in sickness allowance; estimated allowance: just under €1,300 per month (gross).
€3,000 monthly salary – Reduction of €200 per month; estimated allowance: approximately €1,700 (gross).
€5,000 monthly salary – Reduction of over €400 per month; estimated allowance: just under €2,000 (gross).
€7,000 monthly salary – Reduction of over €500 per month; sickness allowance now covers only 30% of salary, with an estimated allowance of just under €2,300 (gross).

The estimates are general calculations and do not account for individual factors or eligibility requirements. If Insurance is not responsible for the accuracy of these figures.

Despite concerns about affordability, 60% of working Finns said they plan to increase their financial preparedness in the near future. If Insurance offers income protection options, including daily allowance coverage, permanent disability insurance, and serious illness coverage.

Source: www.helsinkitimes.fi