Chatting Group Income Protection

It can be challenging to raise the topic of income protection with a consumer client, especially after going through the advice process for another product such as a mortgage or investment.

Some people might see themselves as not at risk (the old “it won’t happen to me” mindset) or they might see their partner’s income protection needs as taking priority over their own. Or they could consider themselves uninsurable because they are living with a disability or long-term health condition. Or they could just want to park the conversation for another day (which often never comes).

But what if asking one last question could re-open the discussion? Where could the conversation go following the question “What’s your benefits package at work like?”?

The answer might range from “I don’t know” through to “OK, I think” to “great” or “rubbish” but what really needs to come out of that chat is whether or not someone has access to long-term sick pay via their employer. Those who do will have some level of protection in place and it might be that the conversation stops there, but for those who don’t, the conversation can turn to “so how would you or your family manage without your income?”

Having this conversation with a business owner or executive about their workers after a discussion about their own or their business’s protection risks could take the conversation in a whole new direction too. It might even transpire that income protection could be provided for the whole workforce for not much more than or a similar price as any income protection being considered for the business owner/executive(s) in isolation.

So what is group income protection insurance? Basically, it’s insurance that underpins an employer’s promise to provide long-term sick pay to their people. It can also replace lost income where an employee has to take a part-time or lower-paid position because of illness or injury.

If the employee can’t work due to illness or injury the policy will pay a benefit of a proportion of their salary. The benefit is paid to the employer and then passed on to the employee through the PAYE system. Tax, national insurance and pension contributions continue to be paid in the normal way (as for salary).

But it’s so much more than just a financial pay-out.

Insurers will also work with the employee and their employer to get them back to work as soon as it is appropriate, often by providing access to help or even treatment, which may not otherwise be available to the employer or employee – such as fast access to physiotherapy or talking therapies at the insurer’s expense.

Group income policies come with a number of embedded help and support services for employees, business owners, HR and line managers to use. Interactions with embedded services such as an Employee Assistance Programme, HR and line manager advice, online GP services, second medical opinion services and physical and mental health apps increased exponentially during 2020 and 2021 reaching a record number of 220,886 interactions during 2021[1] (compared with 74,707 pre-pandemic interactions during 2019[2]). This utilisation demonstrates just how valuable the support is to individuals.

So, not only can a business gain from the financial advantages of having insured their liability to continue salary in the event of a long-term sickness absence, but they can gain access to services that they would otherwise have to pay for, which can position them as a caring employer of choice.

For employees, group income protection can give access to financial protection without them having to do any of the hard work, at no or low cost and, generally, with a generous basic level of cover for all members of a group policy without the need to provide medical evidence, and irrespective of their state of health.

Group risk providers do ask for medical details for the top few earners within a business but, even then, they will still generally get a generous level of benefit which is free from medical underwriting. Where high earners are medically assessed for a higher level of benefit, this is generally only done once.

All this is incredibly inclusive and beneficial – not just for those who might not otherwise think of the importance of making their own provision, but also for those who can’t afford it, or who have health conditions, or are living with disabilities that might mean they would be declined or charged extra premiums for cover under an individual policy.

The business sets the benefit design and cover levels with the help of their adviser. These can be aligned to their philosophy, budget and contractual obligations or simply based on good/competitive practice. The business will also take advice on the suitability of providers by way of a market review – a process undertaken regularly which keeps design appropriate and costs down.

All of this from just one extra question. What’s to lose by asking?

Katharine Moxham

Spokesperson, Group Risk Development (GRiD)

About GRiD

Group Risk Development (GRiD) is the industry body for the group risk sector, promoting the value to UK businesses of providing financial protection for their staff, enhancing their wellbeing and improving employee engagement. Our membership includes insurers, reinsurers, intermediaries and those operating in (or with other interests in) the UK group risk market. Together this forms a collective wealth of experience built over many years. Under the chairmanship of Paul White (head of technical, Howden Employee Benefits & Wellbeing) GRiD aims to promote group risk through a collective voice to Government, policymakers, stakeholders and employers.

GRiD works with government departments and regulators involved in legislation and regulation affecting group risk benefits, and with other organisations involved in the benefits and financial protection arenas. GRiD also seeks to enhance the industry’s standing by encouraging best practice and by participating in industry-wide initiatives such as the professional qualification in group risk managed jointly with the Chartered Insurance Institute.

GRiD’s media activity aims to generate a wider awareness and understanding of group risk products and their benefits for employers and employees.

GRiD’s dedicated spokesperson, Katharine Moxham, provides expert media comment on a full range of group risk issues.

www.grouprisk.org.uk

Follow Katharine Moxham on Twitter @KMoxham

[1] GRiD 2022 Claims Survey

[2] GRiD 2020 Claims Survey