From this month life becomes tougher for anybody with a long-term illness, as new government regulations designed to reduce benefits payments by Pounds 1.5 billion a year come into effect.
But teachers looking to insure themselves against illness can join a scheme that pays them straight away, instead of after the 28 weeks claimants have to wait for the new incapacity benefit or the 13 weeks on a typical private health insurance scheme.
The scheme is said to work out cheaper than any insurance company's illness cover, especially for women (who are normally charged more than men for the same benefits, because they allegedly fall ill more often). It also pays back the bulk of your contributions, minus administration costs and any claims - though there are penalties if you try to get them back too rapidly. Tax-free interest is paid on the contributions as well.
Don McCamley, chief executive of the Schoolteachers Friendly Society, based in Liverpool, admits that the scheme "sounds too good to be true", especially the bit about returning 80 per cent of contributions. But the SFS, which currently has 5,000 members and Pounds 7 million of assets, has been providing such a service since it was founded by members of the old National Association of Schoolmasters in 1922.
When teachers join the scheme, which has five full-time employees and 105 local secretaries who are either serving or retired teachers, they agree to pay anything between Pounds 2 and Pounds 24 a month into the common fund. Every year 80 per cent of contributions are credited to the member's own fund. When an illness claim is made (which can be done on a doctor's certificate - you do not have to be hospitalised, just off work) the SFS pays a weekly sum equivalent to seven times the amount paid in contributions each month. Thus if you were paying Pounds 20 a month, you would get Pounds 140 a week.
The benefits come partly out of the common fund and partly out of the member's fund, with the proportions depending on the age at which you joined. A member who joined aged 34 or less has a quarter of the benefits taken from his or her fund, until it runs out, at which point all benefits cease until the following January. Teachers who join after the age of 34 have to pay higher proportions of benefits from their own funds, again until those funds run out. But many members are hardly ever ill, or only for periods which never exhaust their personal fund, the SFS says.
The funds earn interest at a rate - 6.5 per cent last year - which usually betters high-street bank deposit accounts and as the SFS is a non-profit-making friendly society with all assets belonging to the members, the interest is allowed to be tax-free. Members are also allowed to put up to four times their contribution to the sickness income benefit plan into a separate tax-free deposit account.
Claims have been rising, McCamley says, "a reflection of the workload teachers have". Most of the illnesses we see are stress-related or heart conditions, with intermittent flus and viruses as well."
The SFS, McCamley says, is a "niche player", with just one product, compared to the big insurance companies. Although a concern such as Friends Provident is able to offer schemes that will pay long-term illness benefit indefinitely until 65, these are naturally more expensive than the SFS plan, especially for women, and there is no chance of getting your contributions back if you do not make a claim, let alone earn interest on them.
In addition, McCamley says, the SFS is able to maintain that rare commodity in the world of finance today, the personal touch. With an average of 50 members to each local secretary, each member is known to the person who deals with claims and sends cheques out, and each local secretary keeps in touch with every ill member. "It's a unique service," McCamley boasts.