Group Income Protection Insurance is an employer paid benefit which works in tandem with your company sick pay policy. It is designed to cover a proportion of an employee’s gross income should they suffer an accident or sickness that prevents them from working in their current job role.
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 heath conditions and musculoskeletal problems are in the top five causes of workplace 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.
Most workers 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, a worker must:
The standard rate of SSP is £95.85 per week. Clearly, this is only a minimal figure that would see most workers struggle financially.
Employers who want to further support staff will often supplement SSP with some form of occupational sick pay. This might be a set number of days, weeks or months at full pay.
Group Income Protection goes a step further than this, kicking in after the end of occupational sick pay to support those off work in the longer term.
In most cases the answer is yes. Employees 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.
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:
With Group Income Protection, there’s a particular focus on managing absences before they become claims. As such, early intervention programmes work alongside it to provide tangible benefits. This might include:
The aim is to get workers back on their feet and in 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.
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 it needs them to be absent from work.
UK workers 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 employees.
There are a range of factors that impact the cost of Group Income Protection. You can adjust some to manage the cost of cover, while others are fixed and can’t be changed.
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.
Below is an average cost of Group Income Protection Insurance for two different businesses.
However, these are only designed to give a rough idea of the cost of premiums. For personalised quotes for your business, don’t hesitate to get in touch. You can reach us on 02084327333 or email email@example.com.
Number of Employees
Level of Cover
50% of Salary
75% of Salary
Policy Cease Age
65 / State Pension Age
65 / State Pension Age
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.
Group Income Protection is not normally considered a P11D / benefit in kind. There’s therefore no additional tax to pay on this cover in most circumstances from an employee’s standpoint.
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:
Setting up and maintaining a competitive Employee Benefits package can be a bit of a headache. We do the heavy lifting for businesses of all sizes throughout the UK so they can focus on what they are best at: Delivering their own proposition.
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 firstname.lastname@example.org.
The staff have been very knowledgeable and I have enjoyed working with Nadeem on setting up our plan.