Group Income Protection pays a proportion of employee’s salary if they are off work due to accident or illness for a prolonged period. Having Group Income Protection gives both employer and employee peace of mind during what can be a difficult time.
Why Should Companies Consider Group Income Protection?
Long-term illness can represent a substantial financial strain for both employers and employees. You can choose to either make payments directly to an individual or use the policy to fund payment for a limited period and then provide your company with a lump sum to fund a leaving service benefit.
Statistics show that sickness and absenteeism can place an enormous strain on company financial resources. Group Income Protection helps the employer to manage long term sickness more effectively. At the same time employees feel that they have the support of their employer during a very stressful time.
- Employer/employee relations are strengthened in that both feel supported by each other.
- The company can provide financial assistance to employees at a reasonable cost.
- The company can manage the cost of sickness and absenteeism more effectively.
- The premiums for the policy enjoy tax relief on contributions.
- Company pension scheme contributions and employer NI contributions can also be included.
- The company can benefit from policy provider rehabilitation schemes.
- Continued sick pay when it is really needed.
- Support and reassurance from the company.
- Rehabilitation scheme provided by the insurer.
- No benefit in kind tax penalties.
Group Income Protection can be set up with a deferred period of 13, 26, 28, 41, 52 and 104 weeks. The longer the deferred period the lower the premium will be. Typically the cost of providing Group Income Protection is usually between 0.5% -1.5% of payroll but largely depends on the type of business. White collar workers are cheaper to insure. The policy is very flexible in how it is set up. Indexation, Pension contributions, NI contributions salary limitations can be included. Most policies offer minimal administration set up and it is common that only the higher earners need medical underwriting.
Frequently Asked Questions
What is a Group Income Protection Insurance Scheme?
It is insurance taken out by an employer to provide income protection cover for employees.
What is an Income Protection Insurance Benefit?
Income Protection Benefit is the regular payment made by the insurance company to your employer. This is not an early retirement pension or an unemployment benefit and continued payment is dependent upon regular medical reviews to establish ongoing incapacity.
How will the benefit be paid?
The insurance company will make benefit payments to your employer in accordance with the policy conditions. This will allow an employer to continue to pay you a proportion of the salary you were receiving prior to the date when your illness or disability occurred.
Will I pay tax and National Insurance contributions on this benefit?
Yes. Your employer will deduct income tax and National Insurance contributions from the amount you receive.
Will I still get State Benefits?
Yes. Provided that the Jobcentre Plus (part of the Department for Work and Pensions) accept your claim you will receive your State Benefits. Any medical assessment required by the Jobcentre Plus will be separate to that required by the insurance company in processing and reviewing your claim under the Group Income Protection Scheme.
Can Income Protection Insurance Benefit be paid if I go back to work?
Yes. The insurance company will consider the payment of a proportionate benefit to top up earnings where only a graded or partial return to work is achieved or where a return to a lesser paid position is undertaken by you.
What happens if I return to work and suffer a recurrence of symptoms?
Your employer’s Group Income Protection Scheme allows them to make a claim where your further incapacity is due to the same or a related condition, lasts for more than one month and occurs within twelve months of your return to work.
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