Group Income Protection Insurance

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If an employee becomes sick or injures themselves too severely to work, a Group Income Protection scheme will provide them with a monthly income to supplement their lost earnings while they are recovering.

This company paid benefit comes with a number of really valuable support services to proactively reduce sickness absence as well as providing access to rehabilitation specialists to help ill staff return to work.

  • Protects against any illness or injury stopping an employee from working.
  • Works with and complements the employers sick pay policy.
  • Covers up to 80% of employees’ salaries.
  • The company owns and pays for the policy for its staff.
  • Usually comes with additional support services to help manage sickness absence more effectively.
  • Supports your staff through what could be an emotionally, physically and financially difficult time.

Why Is Group Sickness Insurance Important?

According to the Office for National Statistics (ONS), illness or injury caused 141.4 million lost working days in the UK in 2018. This equates to around 4.4 days per worker.

While most employees are understandably worried about serious illnesses, it’s actually less critical conditions that most commonly keep staff off work.

The ONS says the top cause of sickness absence in 2018 was “minor illnesses”. These caused 27.2% of absences and consist of coughs, colds, flu, sickness, nausea and diarrhoea. Rounding off the top five causes are:

Both mental health issues and musculoskeletal problems are in the top five causes of workplace sickness absence. These can be long-term conditions requiring weeks or even months off work. This is despite them not being as ‘critical’ as a heart attack or cancer diagnosis.

What About Statutory Sick Pay?

Most employees are entitled to Statutory Sick Pay (SSP) if they’re off work ill for 4 or more consecutive days. You as the employer pay this for up to 28 weeks.

To be eligible for state benefits, a worker must:

  • Be earning at least £120 per week
  • Be classed as an employee and have done at least some work for the employer.

The standard rate of SSP is £95.85 per week. Clearly, this is only a minimal figure that would see most staff struggle financially.

Supplementing Employees’ Statutory Sick Pay

Employers who want to further support staff will often supplement state benefits with some form of occupational sick pay. This might be a set number of days, weeks or months at full pay.

A Group Income Protection scheme goes a step further than this, kicking in after the end of occupational sick pay to support those off of work in the longer term.

Can Employees Still Claim ESA?

In most cases the answer is yes. Your staff can receive an Income Protection payout from their group scheme and Employment and Support Allowance (ESA), which is one of the main government incapacity benefits.

This is because ESA is usually contributions-based rather than income-based. This means it’s based on your National Insurance contributions record over time rather than your earning capacity.

However, in some cases ‘old-style’ ESA can be income-based. If there is any doubt about which one you qualify for and whether it will impact your claim, clarify this with your local Job Centre Plus or the Department for Work and Pensions.

The Benefits Of A Group Income Protection Scheme

Offering this cover provides staff with the clear signal that you value them and are there to support them when they need it most.

Furthermore, an impressive benefits package can:

  • Attract new employees
  • Improve employee retention and engagement
  • Reduce stress
  • Manage sickness absence.

Helping Reduce Sickness Absence

With Group Income Protection policies, there’s a particular focus on managing sickness absence before they become claims. As such, early intervention programmes and rehabilitation services work alongside the policy to provide tangible benefits. This might include:

The support services and employee assistance program aim to get workers back on their feet and return to work faster than would be the case otherwise, all for free with the policy. This can help reduce financial strain on both staff and the business by reducing sickness absence.

Most importantly, staff can use these benefits before it becomes necessary to make a formal claim, potentially preventing their illness from escalating to the point they end up absent from work.

Benefits For Employees

UK employees are notably under-protected. Just over 1 in 10 UK workers have Income Protection according to our Individual Protection Survey. Moreover, when asked why this was the case, nearly 1 in 5 people surveyed said they’d never heard of it.

Yet it’s a valued benefit, offering income security no matter what the future throws at you. Having an employer introduce and pay for it could therefore be a significant weight off employees’ minds.

Furthermore, Group Income Protection means that staff don’t need to rely solely on minimal SSP should they be off work long-term. This results in better financial outcomes for your staff.

How Much Does Group Income Protection Cost?

There are a range of factors that will impact your Group Income Protection quotes. You can adjust some to manage the cost of cover, while others are fixed and can’t be changed.

Policy Options

  • Level of cover
    Most insurers allow you to protect between 50%-80% of gross salary. The more of your workers’ salaries you wish to cover, the more Income Protection costs.
  • Deferred period
    The deferred period is the time that passes between an employee first being off sick and the insurer paying a claim. The typical deferred period starts at 13 weeks. The longer the deferred period, the lower the monthly premiums.
  • Length of payout
    The payout can be limited to 1, 2 or 5 years or until retirement age. The longer the benefit payment period, the higher the cost of premiums.
  • Include National Insurance and pension contributions
    In addition to gross salary you can opt to cover Employer National Insurance and employer pension contributions. These options will increase the cost of cover. 
  • Premium frequency
    You can usually get a small discount if you’re able to pay your premiums annually rather than monthly.

Factors You Can’t Control

  • Age
    The older your workforce, the more likely they are to suffer illnesses and injures and the more expensive your premiums will therefore be.
  • Industry and occupation
    There are some industries which are considered higher risk. For example, builders are more at risk of suffering on-the-job accidents than a desk worker. Industries which pose a higher claims risk have higher premiums.

The Importance of an ‘Own Occupation’ Scheme

Opting for Own Occupation cover ensures your staff can make a claim should accident or sickness prevent them from doing their specific job.

There are alternative, lesser definitions; however, we don’t typically recommend these, which are laid out briefly below.

  • Suited Occupation
    The employee must be incapable of carrying out the duties of their own occupation or any other job they are qualified for.
  • Activities of Daily Living
    The employee must be incapable of completing a certain number of everyday tasks such as climbing stairs or signing their name. This is the hardest definition for your staff to make a successful claim on, so we tend to say it’s best you avoid it.

Example Cost of Premiums

Below we have calculated the average cost of employee income protection insurance for two different employers.

However, these are only designed to give a rough idea of the cost of premiums. For personalised group sickness insurance quotes for your business, don’t hesitate to get in touch. You can reach us on 02084327333 or email

Construction Firm

Bakery Firm



Milton Keynes

Number of Employees



Level of Cover

50% of Salary

75% of Salary

Payment Period

2 Years

2 Years

Policy Cease Age

65 / State Pension Age

65 / State Pension Age

Deferred Period

4 Weeks

13 Weeks

per employee

per month

per month

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How Does HMRC Tax A Group Income Protection Scheme?

HMRC taxes it differently from personal Income Protection.

You pay for personal Income protection from net income, which has already had tax and National Insurance deducted. Insurers therefore pay claims tax-free on personal policies.

However, as Group Income Protection Insurance is paid for by employers, who can usually write off the cost against corporation tax, HMRC taxes it when a claim is made.

The insurer pays the claim to the employer should a worker fall ill. The employer then distributes the funds to the worker in the appropriate manner, typically through PAYE. The PAYE system deducts tax accordingly.

It is not normally considered a P11D / benefit in kind.

Who Are the Best UK Group Income Protection Providers In 2022?

We are an independent employee benefits adviser with access to all the best UK Group Income Protection providers. No two are the same and some suit particular sectors or businesses better than others.

We work with every single major UK insurer to gather you the best quotes, including:

  • AIG
  • Aviva
  • Canada Life
  • Legal & General
  • Unum.

All of the top UK insurers include an employee assistance programme with mental health and rehabilitation support to help reduce sickness absence.

Need Income Protection For A Single Employee Or Director?

As a business you need a minimum of 3 employees to set-up a group income protection policy.

If you have a single employee or director that needs cover you will want to consider executive income protection. It is paid for by the employer on behalf of the employee and benefits from the same tax position as a group scheme.

Common Group Income Protection Questions

  • How Do You Make A Claim?

    To make a claim on your Group Income Protection policy, there’s a claims form to fill in for both the employer and the employee. You can download a claims form from the insurer’s website or increasingly submit a claim online.

    As soon as it looks likely that an employee will be off work for longer than the deferral period, you should notify the insurer.

    That way, the the insurer can get the ball rolling on the claim so the funds are there to be paid immediately if the insured employee is still off after the deferred period ends.

  • Does Group Income Protection Replace Statutory Sick Pay?

    Statutory Sick Pay is the minimum legal requirement you must pay all employees earning an average of at least £118 per week who are off sick for 4 days or more. It’s worth £95.85 a week for 28 weeks.

    As an employer, it’s there if you don’t have any sick pay policy in place (e.g. a period off work with full pay) or an insurance product.

    The minimum deferral period, or waiting period, on Group Income Protection policies is 13 weeks, so you can’t get a policy that pays out sooner than 13 weeks. This means you’ll have to pay at least Statutory Sick Pay for the initial 13 weeks.

    Once the Income Protection benefit kicks in, you no longer have to pay Statutory Sick Pay because the insurance policy takes over your obligation to pay.

  • Is It A P11D Benefit In Kind?

    No, Group Income Protection is not normally considered a P11D / benefit in kind.

    This means there’s typically no additional tax to pay in most circumstances on premiums from the employees’ standpoint as a result of the company taking out cover for it’s staff.

  • Does It Cover Pension Contributions?

    Many insurers provide the option to cover pension contributions and employer NI in addition to the employee’s basic salary.

    This option needs to be selected when setting up the policy and is calculated as a percentage of the member’s salary.

  • Will It Pay Out A Lump Sum Settlement?

    Depending on the severity of the illness and length of time an employee is likely to be out of work there are circumstances where a lump sum settlement may be offered.

    Such a settlement however sits outside of the standard terms of a group scheme.

Compare Group Income Protection Quotes & Get Expert Advice

Setting up and maintaining a competitive Employee Benefits package can be a bit of a headache.

We do the heavy lifting to set-up and maintain a competitive benefits package for businesses of all sizes throughout the UK so they can focus on what they are best at: Delivering their own proposition.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

If you need help setting up a group income protection scheme give us a call on 02084327333 or email

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Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

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