What is Group Income Protection?

Employers are often advised to offer group income protection as part of their employee benefit schemes. The question is, what is group income protection, what does it cover and what are the benefits it offers to employers and employees? Read on to find out.

What is Group Income Protection?

Group income protection insurance is a type of policy taken out by employers on behalf of their employees with the primary purpose of protecting them against the loss of earnings due to long-term illnesses or injuries.

Policy Options

Benefits and premiums are typically based on employees’ earnings, with options generally designed to meet employers’ specific budgets and needs. Varying between insurance providers and policies, such options may include:

• A basic benefit that can be limited to a specified number of years (typically 2 to 5 years) or paid up to a specified age (i.e. pension age)
• Cover for employers’ National Insurance contribution liability
• Rehabilitation support, which can help employees return to health and subsequently work sooner
• Long-term supplementary benefits covering continuing employment costs like pension contributions or other business expenses
• Short-term (6 or 12 months) supplementary benefits covering extra expenses (i.e. cost of temporary or replacement staff)
• Final lump sum payments designed to be paid at the end of a specified, limited period (i.e. to fund an employee’s early retirement)
• Initial lump sums ranging up to £10,000 if employees are absent for 14 days or more due to cancer, stroke or heart attacks

Policy holders are typically also offered a choice concerning when benefits commence and whether benefit payments increase over time or remain constant.

Benefits to Employers and Employees

Providing continued income for employees who are incapacitated due to sickness or injury, group income protection relieves their financial worries during what are already difficult times for them. This not only benefits affected employees but, by boosting morale and potentially attracting/maintaining the right kind of staff, it also benefits employers, as both these factors are vital elements of business growth and success.

A group income policy with rehabilitation support also helps employers to manage sickness absence and associated expenses better by reducing the length of such absences and subsequently the impact they have on the company.

Summary

Long-term illness or serious injuries can threaten both the financial security of employees and the successful, smooth running of a company. By taking out group income protection policies, employers can protect both their employees’ financial future and the future of their company against the potential ramifications of such illnesses/injuries.

Expert Advice

Our knowledge of the insurance industry and years of experience in assisting companies in successfully setting up group protection schemes mean we can help you find the right type of policy to protect yourself and your employees against the detrimental effects of long-term illnesses and serious injuries. Please get in touch or call us now on 01279 315 013 to discuss your specific requirements.