Munich Re: Bridge gap with US-style cover for ex-employees

Munich re has called for the adoption of US style ‘gap cover’ in the UK. Speaking to providers at a group risk conference Andy Milburn, head of marketing, noted that membership of group schemes did not end for Americans losing their jobs, as there was bridging legislation in place.

Ex employees can, for a reduced price, remain in the employers group plan for up to 36 months after leaving employ. For employees, qualifying events include: Resigning, being fired for a reason besides gross misconduct, being laid off, or having work hours reduced.

Milburn was enthusiastic about the plan, he said: "If are redundant, on your leaving date you lose your employee benefits, death in service and disability cover be it short or long term, for example. This scheme is funded by the US Government and provides the opportunity to ‘continue' your cover while waiting to begin a new job. This is a great idea and that we should have something similar in the UK. Is there anything stopping us? I can see no reason why we cannot bring this in quite quickly into the UK."

He also highlighted the Australian situation, in response to comments from chairman of Friends Provident, Trevor Matthews, who proposed including an element of group protection benefit automatically.

Milburn commented: "It's a good idea in principal although but some employees think the small amount of cover automatically included as part of their ‘super' compulsory pension contribution is enough. It's not in most cases. People are being pointed towards these funds instead of advice, as the premiums are cheaper."

Mark Jones, head of protection marketing at Friends Provident, who has recently been in Australia, (page 14) said: "These are effectively group life schemes and as a result coverage in Australia is that much greater. I wouldn't say they are fully protected though. There is also a vibrant market outside the superannuation funds but within them it is so easy to buy protection at reasonable cost, without the underwriting barriers."