Group Income Protection Advice Cambridge

When you think of exciting employee benefits or employee reward packages, group life assurance is most likely not at the top of the list.

Group income protection insurance has evolved

Once misleadingly known as ‘permanent health insurance’, group income protection insurance has evolved and modern policies will provide financial benefit and rehabilitation support to the employee and the employer, often with the addition of a free Employee Assistance Programme (EAP) as part of the scheme benefits. A loss of income can have devastating effects on an employee and their family, therefore income protection is an employee benefit that staff value highly. Essentially you are providing your employee and the business with much needed support.

How does it work

The policy can be designed to also insure Employer National Insurance Contributions

The Group Income Protection policy is a wholly employer funded benefit. In the event that an employee cannot work due to illness or incapacity. After a defined continuous absence, known as the deferred period which can be as little as 4 weeks up to 52, the employee will receive a set percentage of their pre-disability salary (subject to the insurer receiving supporting medical evidence). The policy can be designed to also insure Employer National Insurance Contributions and Pension Scheme Contributions, as well as employee pension scheme contributions. The benefit is paid to the employer, for payment to their employee via their PAYE and is subject to all the normal deductions. The monthly benefit will continue to be paid providing the claim is still medically valid. The policy can be designed to pay benefit for a limited period, say 2 years or to a set age of 65 or State Pension Age. Throughout the absence period, the insurer will offer support to help the employee to return to work if possible and guidance to the employer to facilitate this.

However, the benefits of income protection are not just for the employees. There are reasons why offering group income protection insurance as an employee benefit can be advantageous to your business too:

There’s no doubt that prospective employees will see this as a great addition to their salary. With so much competition out there, you want your company to keep its edge. Income protection will make your business much more attractive, and therefore can reach the best talent available. Once that talent is through the door, you do not want to lose it. Hiring and retraining staff costs money, which impacts on profits. When staff feel valued in a company they are likely to remain in that job longer. Knowing their company has the right policies in place when they are in need will allow them to feel proud for who they work for. They will not want to lose that safety net.

Employee absence due to illness or incapacity impacts on a business. The associated cost of providing cover for an absent employee can be expensive and put strain on their colleagues who may be required to take on extra work. The support and services provided as part of the scheme can help the business save time, effort and costs. And provide a wealth of expertise in what can be a difficult time.

In addition, as a company provided benefit, the premiums are normally considered as a business expense and therefore tax deductible. This is not a P11D benefit so employees are not taxed either.

Safety net – An employee with income protection is one that is safe in the knowledge that should the worst happen, they will still receive an income. More than just a salary, you are giving the people who work hard for you everyday, the peace of mind they need.
No medical questioning – Employees enrolled on the policy when they are first eligible to do so, will not have to face invasive medical questioning like they would on an individual plan. There are no ‘pre-existing’ conditions exclusions when your employees first join your company GIP scheme.

Overall group income protection provides employees with the cover they need to support themselves and their families in times of need. But it also has a strong set of advantages for your firm to have it as an employee benefit. Knowing you are best placed to create a great team and keep them, whilst also knowing that you are doing the right thing for your employees is something to be proud of. A firm that values its employees is a firm that will go far as it should never be forgotten the people are a company’s greatest asset!