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.
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.
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 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.