Group Income Protection
why should an employer buy it?
What is Group Income Protection Insurance?
Group income protection is a benefit offered to employees by their employers. It provides a replacement income to an employee if they’re unable to work for an extended period due to illness or injury. The insurance normally pays a specified percentage of the employee’s salary, typically 50-75%.
How does it benefit employees and employers?
Loss of income over an extended period can have devastating consequences. Not only does it impact the employee and his/her finances, but it often also has wider implications that affect the whole family. Most employers would agree that when their employees are happy and healthy, they’re at their best and most productive. This is just one of the many compelling arguments for employers to offer group income protection benefits to their workforce.
Others include:
Attracting and holding onto talent
Group income protection offers employees long-term financial security and is an appealing benefit for many. Providing income protection can therefore be an effective way for small businesses as well as larger ones to attract and retain employees.
Doing what’s right (and being seen to do it)
Illness, injury and accidents are part of life. Employers need to be aware of this and prepare for how they might handle an employee being off work unexpectedly for an extended period. This also means thinking about how they would financially support that employee.
Inevitably, the way in which an employer handles this scenario for a single employee is likely to have a major impact on how the entire workforce views the employer. This can have obvious and very real ramifications when it comes to areas like staff loyalty and retention, for example.
Paying the employee a salary, whilst paying out for a temporary replacement is likely to be unsustainable for many businesses. Group income protection provides a route by which the employer can continue to provide a regular income to the employee.
Financial security if the worst happens
Many employers do not provide further financial support to individuals who are absent beyond 28 weeks (when UK statutory sick pay stops). The employee then finds his or herself without a source of income, aside from any other state benefits he or she is eligible to claim. Group income protection avoids this scenario and the employee has the long-term financial security he or she needs.
Built-in additional support
In addition to providing early intervention and ongoing rehabilitation services, many group income protection policies also offer access to employee assistance programmes. These provide useful, practical information and support to employees on a range of topics including legal and financial matters, for example.
Group income protection policies are easy to set up and manage, without the need for individual employees to complete medical questionnaires in most cases. The cover is typically cheaper than that which an employee could purchase privately. Premium payments are also usually tax-free if paid for by the employer.
How does Group Income Protection Insurance work?
Group income payments usually begin after an employee has been off work for a defined period of time. This period is normally six months, as this coincides with the payment period for statutory sick pay in the UK. Payments continue until the employee is well enough to return to work or until the policy’s payment end date. The policy may run for a fixed number of years, or until the employee reaches State Pension Age.
Why should employers buy Group Income Protection Insurance?
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