Group Income Protection Insurance

Why Is Group Income Protection Important?

Group Income Protection is essential for employers, as 35.2 million working days were lost in 2022/23 due to work-related ill health and injuries, equating to an average of 15.8 days per employee.

Top Reasons For Workplace Absences

Many of us worry about developing a serious illness, but it’s actually minor health issues that cause more sick days. In fact, stress, mental health, and musculoskeletal disorders accounted for the majority of days lost.

According to ONS, the top reasons for workplace absence in 2022, were:

It’s clear that minor illnesses top the list for workplace absences, but mental health issues and musculoskeletal problems are also major contributors. These conditions can lead to extended time off, sometimes lasting months. While mental health challenges like stress or anxiety may not seem as urgent as a heart attack or cancer, their impact is profound and can seriously affect both employees and businesses.

Plenty of businesses provide Group Life Insurance to their staff. Although this is a great benefit, people are more likely to be absent due to illness than to pass away while working for you.

With this in mind, you can start to see just how valuable Group Income Protection Insurance can be.

Joanne Jones
Consultant, Employee Benefits

Statutory Sick Pay Isn’t Enough…

It’s not just important for you as an employer either. Most employees are entitled to Statutory Sick Pay (SSP) if they’re off work ill for 3 or more consecutive days. As an employer, you pay this for up to 28 weeks.

However, the standard rate of SSP is £116.75 per week. When you compare this to your staff’s salaries, it’s a small amount and most would struggle financially if they were off work. This is exactly why financial protection is essential.

How Does Group Income Protection Work?

As an employer, you own and pay for a Group Income Protection policy. Once a policy is live, if an insured member of staff is unable to work due to sickness or injury, after a set amount of time (deferred period), the policy would start to pay out a monthly benefit.

This monthly benefit would be paid to you (the employer) to pass on to the employee via payroll. When the benefit gets paid, the level of it and how long it gets paid for will depend on the policy options you chose when setting up a policy. It’s important to note that adjusting these options will impact the cost of your policy.

Are There Any Eligibility Requirements?

Yes. As the employer, you will have to agree what the eligibility conditions are with the insurer. Typically, these will be factors such as:

• Minimum / maximum entry ages
• Categories of members to be covered
• Any level of qualifications you think should apply
• When new employees can join the scheme (e.g. after their probationary period)
• When existing members can increase their benefit.

How Long Does Group Income Protection Last?

The length your Employee Income Protection policy lasts depends on the policy terms. It might be that a policy lasts:

• Until the employee returns to work—payments continue up until this point
• To a specific age—payments continue until the employee reaches a certain age, usually between 65 and 70
• To State Pension Age—payments continue until the employee reaches this
• For a limited amount of time—you can set up a policy to have a payment period of between 2 and 5 years.

Does Group Income Protection Replace Statutory Sick Pay?

All UK employers are required to offer Statutory Sick Pay (SSP) to eligible employees who earn at least £123 per week and have been off for three consecutive days, including non-working days.

If you don’t have a company sick pay policy or an insured option, SSP is provided. This is payable by you, the employer, for up to 28 weeks of absence. If an employee needs more than 28 weeks off, Group Income Protection can act as a continuation of their sick pay.

Most of the time, the minimum deferred period on a Group Income Protection Scheme is 13 weeks. You won’t be able to get an insurance policy that pays out sooner than this. This means you’d have to pay SSP for at least that 13-week period. Once the Group Income Protection monthly benefit kicks in, you no longer have to pay SSP because the policy takes over.

What Does Group Income Protection Cover?

Group Income Protection covers any illness or injury that prevents an employee from doing their job. The exact specifics of your group policy will depend on the level of cover you select and the provider. Different providers offer different things, but most policies offer:

• Cover for up to 80% of an employee’s gross earnings (dependent on insurer)
• A benefit paid up until a certain age, or limited to 2 or 5 years
• The option to index link the policy to ensure the benefit aligns with inflation rates
• Long-term benefits, such as cover for pension contributions
• The option for benefits to continue even after an employee has left your company.

Additional Services Provided By Group Income Protection Providers

Group Income Protection maintains a strong focus on helping employers to better manage sickness absences before an employee needs to make a claim.

UK insurers support this by providing early intervention programmes and rehabilitation services to minimise the need for a claim. Managing a health concern before it develops is key here. The longer an employee has off work due to poor health, the harder it is for them to return. Intervening early on helps to reduce the likelihood of long-term absence.

Free Extra Benefits With Your Core Policy

On top of the core cover, some insurers offer a range of free extra services, as well as some of which can be added to your policy for a higher premium.

The following may be included on your group policy:

• Access to telephone / face-to-face counselling sessions for mental health support
• Physiotherapy sessions for musculoskeletal claims
• An Employee Assistance Programme (EAP) and return to work services
• 24/7 Digital GP service—read our director’s experience of using this service
• Nutrition and fitness programmes.

These support services aim to get workers back on their feet and return to work at a quicker pace. As many of these are free with your policy, providing this support comes at no extra cost to you as an employer. It’s a win-win situation for your business and your workforce.

The aim of these additional health and wellbeing services is for staff to use them before they need to make a claim. Doing so may prevent illness or injury from escalating to the point an employee needs time off.

As these services tend to be free, providing this support comes at no extra cost to you as their employer.

It’s a win-win situation for your business and your workforce. Group Income Protection can help to reduce financial strain for staff. But it also helps you to reduce absenteeism.

Joseph Toft
Senior Consultant, Employee Benefits

What Are The Benefits Of Group Income Protection?

There are benefits to be had from Group Income Protection for both your employees and your business.

Benefits For Employers

Offering a Group Income Protection Scheme to your employees shows you value them and are there to provide support at times they may need it. As a result, it can help to:

• Improve employee retention and engagement
• Boost morale and productivity in the workplace
• Reduce stress-related illness
• Manage sickness absences
• Attract top talent and retain your existing staff.

What’s more, the premiums you pay on behalf of your employees for Group IP are an allowable business expense in the eyes of HMRC. More on this later!

Benefits For Employees

Group Income Protection is an invaluable benefit for your workforce, offering crucial financial support if employees need to take time off due to illness or injury. Beyond income replacement, it provides a range of additional advantages, including:

• Assistance with rehabilitation and a smooth return to work
• Access to wellbeing services and early intervention programs
• Financial peace of mind, helping to ease money-related stress.

Crucially, Group Income Protection helps employees feel valued. It shows your commitment to their well-being, fostering loyalty and boosting morale. Employees won’t have to rely on Statutory Sick Pay (SSP), which is often much lower than their regular income, giving them far greater financial security and reinforcing that they’re supported and cared for.

How Much Does Group Income Protection Cost?

There are a handful of factors that influence the cost of Group Income Protection. Some of which can be adjusted to manage the cost, while others are fixed and can’t be changed.

Here are the factors to consider when buying Group IP:

Policy Options

• Level of cover
  Most insurers allow you to protect between 50% and 80% of gross salary. The higher percentage covered, the more a policy costs
• Deferred period (or waiting period)
  The deferred period is the time that passes between an employee first being off sick and the insurer paying a claim. 13, 26 or 52 weeks are the most common periods in the UK. 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 premiums
• Include National Insurance and pension contributions
  You can cover employer National Insurance and employee pension contributions with Group Income Protection. These will increase the cost of cover
• Premium frequency
  You can usually get a small discount if you pay premiums annually rather than monthly.

Policy Factors You Can’t Control

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

Getting “Own Occupation” Cover

When you set up Group Income Protection, you will choose a definition of incapacity for your policy to abide by. There are three options: Own Occupation, Suited, or Any. These refer to an individual’s inability to work.

We recommend clients get Own Occupation cover, as it’s the most comprehensive. It ensures your employees can make a claim should an accident or illness prevent them from doing their specific job role. This is the easiest definition to claim on, as staff only need to be incapable of doing their own role.

The other definitions (as explained below) make it harder to claim successfully, so we don’t tend to recommend them.

• Suited occupation
  To claim, the employee must be incapable of doing their own occupation or any other job they’re qualified for
• Any occupation
  This means an employee must be incapable of completing a number of everyday tasks, such as climbing stairs or signing their name, to claim. This is the hardest definition to claim on.

Example Cost of Group Income Protection Premiums

Below, we have calculated the average cost of Group Income Protection for two different companies.

These are only designed to give a rough idea of the cost of premiums. For personalised Group IP quotes for your business, don’t hesitate to get in touch. You can reach us on 02084327333 or email help@drewberry.co.uk.

Is Group Income Protection Taxable?

HMRC taxes Group Income Protection differently from personal Income Protection, allowing you to offset the cost of premiums against your business’s corporation tax. Since premiums are considered a business expense, they are tax-deductible, helping to reduce your overall tax bill.

Is Group Income Protection Insurance a P11D / Benefit in Kind?

HMRC doesn’t view Group IP as a P11D / Benefit-in-Kind. This means neither you nor your employees pay any additional tax on the benefit.

If an employee makes a claim, the benefit is paid to the employer tax free. The employer is then required to pass the amount on to the employee, which is typically paid via PAYE. As a result, the monthly benefit received is liable for tax, just like the rest of their monthly income.

It’s worth noting that you may not be able to get quotes easily online for this type of protection. This is because group policies are complex and dynamic.

As experts in the employee benefits industry, our team has access to all the UK insurers, meaning they can get quotes and compare them for you.

Nadeem Farid
Head of Health & Wellbeing Benefits

Who Are the Best UK Group Income Protection Providers 2025?

Drewberry™ is an independent employee benefits consultancy, with access to all Group Income Protection providers. No two insurers are the same. Some suit particular sectors or businesses more than others, for example.

With years of experience tucked under our belt, we have helped many businesses to set up their employee benefits. Our team works with every major insurer to provide you with a wide range of options and quotes. These providers include:

• Aviva
• Canada Life
• MetLife
• Legal & General
• Zurich
• Unum.

As we’ve said, each insurer is different. What’s best for your company might be different from what is best for another. Speaking to an independent financial adviser can help ensure you set up the right Group Income Protection for your business.

Need Income Protection For A Single Employee Or Director?

To set up a Group Income Protection policy for your workforce, you need a minimum of three employees. So, what if you have less than three employees? Or it’s just a director that needs cover?

If this sounds like your position, Executive Income Protection is coverage to consider. This is designed with directors, companies with few employees, and companies wanting cover for one worker. It’s paid for by the employer on behalf of the employee, and offers the same tax benefits as a group scheme.

For more information on Executive Income Protection, get in touch. Pop us a call on 02084327333 or email help@drewberry.co.uk. Our experts are here to find the right policy for your needs.

Compare UK Group Income Protection Quotes & Get Expert Advice

Employers have so much choice when setting up their company Employee Benefits. So much so, it can become a bit of a headache. And oftentimes, setting up group insurance is a complex beast to tackle, as many specific business factors have to be considered.

At Drewberry, we do all the heavy lifting for businesses in the UK. It doesn’t matter if you’re a new small business or a larger corporation, we can help to set up and keep on top of the admin of your employee benefits. Letting us, the experts, do all the nitty-gritty work means you can focus on doing what you do best—run a successful business.

If you’d like advice about your employee benefits or need help setting them up, get in touch. Drop us a line on 02084327333 or email help@drewberry.co.uk; we’ll be happy to help.

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.

• We are award winning 🏆 independent insurance advisers who work with all the leading UK insurers
• You’ll speak to a dedicated expert from start to finish
• We are very proud of the 4001 and growing independent client reviews rating us at 4.92 / 5
• We are authorised and regulated by the Financial Conduct Authority. You can find us on the financial services register here 🧐
• Claims support when you need it most.