Group income protection policies are now a fundamental element of reward packages, delivering financial protection to employees at times when they are often most vulnerable. They also provide support and rehabilitation that can help employees remain at work – or return more quickly after a period of sickness or injury.
Group income protection coverage is on the rise: The Swiss Re Group Watch 2023 report shows a 5.2% increase in the numbers of employees covered by group income protection, and a 4.2% increase in the number of insured schemes in 2022. While this is positive news, offering greater protection to employees, there are factors that employers must be aware of:
If you have an insured group income protection scheme, you might want to check your employee communications references the following important key points:
- Income protection provides financial protection in the event of long-term sickness. An insured benefit is paid where a claim has been medically assessed and accepted, with payment commencing after a period of time. This usually dovetails with the company short-term sick pay policy.
- In most cases, the insurer will only pay an accepted claim where there is a reduction in salary, which is recognised as the incentive to return to work.
- The benefit promise should be limited to the benefit amount provided by the insurer.
- Some employees may have their own individual personal income protection policies. A claim on more than one policy may impact the payment on the company group policy, as an insurer often limits benefit to 80% of pre-disability earnings. Other regular income benefits that insurers may also take into account include mortgage payment protection and loan protection policies. Income from other sources will need to be declared by the employee during the claim assessment process.
- Income protection policies can help employees access support that would otherwise be delayed by NHS waiting lists. If the insurer considers that early intervention might prevent ongoing absence, or aid a quicker recovery and return to work, then they may fund some short-term treatment. This can be particularly effective for treatments related to musculoskeletal or mental health, where it has been demonstrated that quick and timely treatment can have a significant positive impact on long-term outcomes.
- Employees should engage in the income protection assessment process, to benefit from any treatment support on offer and to ensure that claims are assessed so there is no potential gap in short-term sick pay ending and claim payments commencing. It is important to recognise that claim assessments rely on medical evidence being provided by treating practitioners. Employees can minimise assessment times by encouraging their GP surgeries to respond to any insurer requests, which might otherwise be regarded as low priority requests.
- Employees should understand that the income protection claim process is confidential, and any medical evidence provided to the insurer is not shared with the employer.
- Income protection benefit is unrelated to state sickness benefit. These benefits have different assessment criteria and acceptance for one benefit does not mean automatic acceptance for the other benefit.
- There are no exclusions on ill health conditions, apart from work related conditions where potential adjustments to the role would alleviate symptoms.
While group income protection offers highly valuable support to employees, it is important that employers communicate how they are put into practice. This will ensure that employees receive the intended benefit from such scheme coverage, understanding how relevant benefits are applied, and avoiding potential conflicts between policies.