Group Income Protection Insurance
Why Insure Your Income?
Think of all the things you insure? These may well include your house, personal possessions, car, phone and health. These are important and commonly insured items.
But what about your salary? All of the above insurances will help in times of crisis or stress, such as burglaries and medical emergencies, but what if unexpectedly you couldn’t work and for a longer period than just a few weeks?
Group Income Protection insurance is designed to provide a replacement income to an employee when they are unable to work over a long-term period. This could be as a result of an illness or injury.
Long term illness and injury can put strains on personal finances, from a practical point of view of not be able to pay everyday living expenses when incomes are reduced or lost. Recovery can be impaired because of associated stress and anxiety from worrying about paying mortgages or rent.
In the event of a claim on an Income Protection Plan, the employer receives regular cash payments which allows them to continue to pay an employee’s replacement salary. In addition employers can also gain access to a huge range of support and assistance services, designed to help businesses, managers and staff.
Insurers offer support to line managers to help them manage the claim.
When Do Claim Payments Start and How Long Do They Last?
Payment normally starts after a deferred period, like a waiting period, (often 26 weeks) and can continue until the employee returns to work or, if earlier, a fixed termination term or age.
The employer takes out the cover and can choose the length of the waiting period. Options include, 4, 8, 12 & 26 weeks and even a year. The cover is usually designed to begin paying out after an employer’s sick pay ends.
Claims can be paid out for as long as the claim period on the plan applies. Example terms that our clients use are 3 years, 5 years, or to state retirement age.
For those using the State Retirement Age, claims could potentially be paid out over 20 or 30 years for some younger employees.
Group Income Protection is designed to help employers by;
- Reducing the impact of absence costs by providing replacement income
- Providing appropriate support to help employees back to work
- Offering help to employers through legal and business advice services
- Enhancing employer’s benefits packages to help them attract and retain employees
Benefits for employees:
- Financial support when unable to work due to illness or injury
- Helps to relieve money worries at a difficult time
- Where appropriate, fast track funded rehabilitation treatment such as physiotherapy and psychological treatment can be provided
- Rehabilitation Support can be provided, throughout absence including support with return to work
When Should the Insurer be Notified?
The insurer should be notified as soon as an employer becomes aware that the absence may become long-term.
Income Protection insurers have an interest in helping employers to manage absence better and where possible will try to help by offering early intervention.
A recent claim we have been involved with is described below:
Whilst an employee was on holiday he had pains in his stomach and was sick. The pain was bad enough for him to go to hospital, where a diagnosis was received that this wasn’t just a type of food poisoning or short-term sickness.
Treatment was provided and the holiday insurance paid for this.
The employee was able to travel home and then went to see his doctor who signed him off work for a number of weeks.
Tests were undertaken and a more long-term and serious diagnosis given. The employee was again signed off work for a couple of months and treatment began. At this point the insurer was contacted.
As the absence got closer to the end of the deferred period, the insurer began asking for medical information from the employee’s GP. Occupational Health reports were also submitted and the insurer agreed to make a pay-out for a limited time of 5 months.
The expectation was that after this time a partial or full return to work would happen.
The employee then suffered other conditions linked to the first illness and it became clear that a return to work would not be an option.
We worked with the employer and submitted new medical evidence to the insurer who then authorised further payment of the claim.
In terms of the management of this particular claim, the insurer requested to review the member’s health after 3 months and will continue to do this.
The employee’s pay was insured at 50% of their basic salary, and the employer continues to pay this to him through the PAYE system.
The policy was arranged so that benefits in payment will increase by 5% per annum and in this case is potentially payable until 2025.
Should the employee’s health improve and the employee returns to work part time, partial payments can continue until a full return to work is achieved.
National Insurance contributions and pension payments can be insured as well and the cover is suitable for Directors and Owners of businesses.
How Can We Help?
We can help employers to set up a scheme for the first time. We can help you to decide on a specification of the cover you require, so that the cover provided best suits your company’s requirements.
We also advise employers who have existing schemes in place.
We conduct market reviews of all the insurers who will be interested in providing cover for you.
Most schemes come with a guaranteed rate for 2 years. We recommend that we conduct a market review of your cover every two years, to ensure that your cover is still adequate for your needs and that the premium you are paying remains competitive.
We are always happy to discuss your needs. If you would like more information about this or any of our other services, please feel free to contact us for a no-obligation discussion on 01298 214 191 and ask for William Annison, or alternatively email: email@example.com
136 Lightwood Road
Tel: 01298 214 191