Group Income Protection

A group income protection policy pays a proportion of the employee’s salary if they are unable to work because of long-term illness or injury. The benefit is paid to the employer, who then passes it on to the employee through payroll. 

Group income protection covers any condition or injury that prevents an employee working long-term, whether that’s a physical condition such as a bad back or cancer or a mental health issue such as stress or depression. The insurer will pay out the benefit if the employee satisfies the definition of incapacity, which will be verified by the employee’s GP or Consultant. 

Financial support kicks in after a waiting period, known as the deferred period. This is set by the employer and could be in line with sick pay arrangements or a period such as 13, 26 or 52 weeks. 

Early intervention 

As well as being a valuable financial safety net, group income protection also provides access to a range of support that can help to minimise an employee’s absence. 

This early intervention works and has benefits for all parties. As well as helping an employee return to work, which is good for them and their employer, it can also minimise the length of a claim and, in some cases, prevent a claim altogether. 

Fully flexible cover 

• The waiting time – or deferred period – before benefits become payable is also flexible, with insurers offering a range of options from 13 weeks to 104 weeks. 

The longer the deferred period, the cheaper the premium but it’s important to consider the broader financial implications when selecting. If an employment contract promises sick pay during the deferred period, the employer will need to fund this. 

• Group income protection benefits are traditionally paid until the earlier of the employee returning to work or a specific age, generally between 65 and 70. It’s also possible to provide cover that pays until State Pension Age.

• Shorter payment terms are also available. Paying an income until retirement is generous but, for a growing number of employers, it’s not in keeping with modern working practices, where the concept of a job for life feels very old fashioned. A limited term policy pays benefits for a maximum payment term, from one to five years.

Group income protection is designed to protect employers and employees from the effects of long-term sickness absence. Where an employee is unable to work as a result of illness or injury, it will provide a replacement income as well as tailored support to help minimise absence.