Group Income Protection Explained
Group Income Protection – a solution that can help protect your employees and your business from the effects of long-term sickness or injury.
What is Group Income Protection
Group Income Protection is a comprehensive solution integrating long-term income protection insurance with absence management and workplace support.
It is considered a highly valued employee benefit which acts as an important means of staff retention and attraction.* The purpose of Group Income Protection is to pay your employees a percentage of their income whilst they are recovering from a long-term illness or serious injury. This financial support can help to alleviate some of the stress and worry they may experience during this difficult time and boost overall morale.
*Drewberry Insurance Complete UK Guide 2020
How does it work
A group policy is established, which is then owned and paid for by the employer. When a claim is made the benefit is paid to the employer and not the absent staff member. The employer processes the payment through PAYE as though it is part of the employee’s salary and the benefit is paid to the employee as net pay.
Key features and benefits
Group Income Protection policies offer numerous features, some of which include:
- A wide range of benefit options available that can be tailored to your business – for example, cover for pension contributions and national insurance or escalation of benefits payments
- A policy can be established for two or more employees
- Early intervention, rehabilitation support and case management
- Cover for up to 80% of salary available
- Different waiting periods before a claim is paid ranging from 8 weeks to 1 year
- Payment periods of 2, 3, 4, or 5 years, or until ceasing age of the scheme
- Options to provide cover for Equity Partners
Reasons to consider Group Income Protection for your business
The cover is typically cheaper than an individual insurance policy that an employee could buy for themselves privately.
Extra support services are often available free of charge
As well as proactive, early intervention services and ongoing rehabilitation, many policies also provide access to employee assistance programmes which offer advice, information and support to all employees in the organisation.
In most cases employees do not need to answer any medical questions
As the policy covers all employees in the organisation, or within a clearly defined group or management grade, in most cases individual employees do not need to complete medical questions.
Premium payments are usually tax free
Premiums which are paid by the employer are not P11D benefits for the employee, and they can be treated as a business expense for corporation tax purposes. However, if set up in a flexible and voluntary scheme, where the employee pays for the benefit themselves, premiums will be subject to income tax and national insurance contributions.
How can we help
We can help you understand how group income protection can benefit your business, your employees and their families when ill-health or serious injury occurs. We can guide you through the different cover options available and assist you in deciding the right features and benefits for your scheme.
We will work with you to put in place cover that meets your specific business needs and can provide ongoing support to ensure your scheme remains fit for purpose as your business grows.
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MWM Employee Benefits Ltd is an authorised representative of Menzies Wealth Management who is authorised and regulated by the Financial Conduct Authority (486548). Registered address: 1st Floor, Midas House, 62 Goldsworth Road, Woking, GU21 6LQ Registered in England and Wales 06597008.