Group IP: Keep on digging

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No longer just an insured benefit, group IP is making waves with a range of additional features and is set to benefit from auto-enrolment and changes to the default retirement age. Nicola Culley finds out why it could be a gold mine for advisers.

Group income protection (IP) is miles ahead of the product it was a few years ago. Regardless of being much more than just an insured benefit, the widespread feeling is that it is hugely under-advised.

But a handful of providers have spotted opportunity in what has been tipped to be a huge growth area. Auto-enrolment, government benefits reform and default retirement age removal are all shaking it up and drawing attention to the benefit.
In the past couple of years, insurers including Zurich and Friends Life have come to market. Zurich has, since its 2009 launch, gained a 7.4% market share.  And more recently, Ellipse entered the group IP market in February this year.

Raising awareness

L&G is one provider that is trying to raise awareness. Linda Baker, market and product development director, explained that many advisers still saw group IP as just an insured benefit.

Additional features such as stress, for example, are something L&G is reporting particular success with. And cognitive behavioural therapy, she added, was there to manage people’s workplace expectations. In excess of 70% have returned to work when illness was managed well, L&G figures showed.

She said: “Advisers need to explain that it offers more. These days you can get limited terms, which helps cost control. And some can even go for a lump sum option after that. Group IP has developed a lot as a product. Plus there are all sorts of other features, like rehabilitation.”

L&G is focusing on integration with companies’ occupational health. L&G has found that, particularly with larger companies, there tended to be a range of benefits: private medical insurance (PMI), occupational health, employee assistance programmes, in-house doctors as well as group IP.

Baker explained: “We have been working very closely with occupational health to find the best course of action. For example, group IP is more effective at managing stress than PMI so it makes sense for us to step in.”

According to L&G, lots of advisers still thought of group IP as it was 10 years ago. Baker said there was a noticeable difference in awareness between larger advisory firms and the smaller set-ups.

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