The financial strain of long-term illness

Cillian Ferry

More than half of workers in Ireland would face financial pressure immediately or within three months if their income stopped, according to new research commissioned by Aviva Life & Pensions Ireland.

The 7-Year Shock, a report by economist Jim Power, examines the potential financial consequences of being unable to work due to illness or injury for the average duration of an Aviva income protection claim, which was 7.8 years in 2025.

Drawing on Aviva claims experience, together with economic, savings and income data, the report explores the gap that can emerge between lost earnings and the financial supports available to workers who are unable to work for an extended period.

The findings come at a time when many workers appear unprepared for a prolonged loss of income. Separate research commissioned by Aviva among 1,000 workers nationwide examined how prepared people are financially if they become unable to work, including how long they could cope without an income and the impact a prolonged absence from work could have on their household finances. The research found that more than half (55%) would experience financial pressure immediately or within three months if they were unable to work due to illness or injury.

The survey also found that 72% of respondents had less than four months of essential living expenses saved, while 60% would not feel financially prepared once employer sick pay or income support ended. Almost two-thirds (64%) said they did not have income protection insurance.

Commenting on the findings, Siocha Costello, Senior Protection Marketing Manager at Aviva Life & Pensions Ireland said: “Most people rely on their income to pay for everyday expenses such as mortgage or rent, household bills and childcare. This report highlights that the financial impact of illness or injury can be much greater and last much longer than many people expect.

“Our research shows that many workers would come under financial pressure within months if their income stopped, while most do not feel financially prepared for a prolonged absence from work. Income protection insurance can provide a replacement income if someone is unable to work due to illness or injury, helping them meet essential expenses while they recover.”

Jim Power, Economist and author of The 7-Year Shock added: “This report highlights a significant gap between how long many people believe they could cope without an income and the reality of a prolonged absence from work. Maintaining a certain standard of living is important for most people, but the reality is that loss of income due to illness renders that impossible for many, and their whole quality of life and life choices can deteriorate very quickly.”

“The evidence suggests that a loss of earnings can create a lasting financial shock, affecting not only day-to-day finances but also longer-term goals such as saving for retirement and building financial security,” he added.

The analysis shows how financial pressure can build as employer sick pay ends, with State supports replacing only part of previous earnings and savings gradually depleted. Over time, this can make it more difficult to cover everyday expenses, continue pension contributions and achieve longer-term financial goals.