I have an SME corporate client who is hugely keen on purchasing group income protection, but they are finding it hard to see it as anything more than extra cost. How can I advise on this and what product types should I suggest?
Once in payment, the level of benefit can be set to escalate at a fixed rate or in line with an index such as Retail Prices Index. Corporates can also opt to have the payment of your premium waived should there be a need to claim – one less expense to worry about.
It is true that income protection is generally a more expensive employee benefit than say, life assurance. However, when you consider that an insurance company could be obligated, depending on the options selected, to pay 75% of an employees salary, escalating at 5% each year for up to 40 years or more, then this expense is justified.
Nick Homer, protection manager, Zurich UK
A group income protection arrangement delivers a fantastic employee benefit that continues to increase in value as ongoing welfare reform erodes state provision for incapacity. The latest review of Employment and Support Allowance resulted in most claimants being eligible to receive benefit for a maximum of just 12 months.
The type of cover can be tailored to suit employer budget. Those introducing a new arrangement do not have to offer a full blown scheme that pays until state retirement age. Cover can be provided for a limited benefit term and lump sum options can be included.
Enhancing the benefits package through the addition of group income protection cover is a low-cost way of rewarding employees without significantly adding to payroll costs. Typically, the cost will be less than 1% of payroll.
The benefits of group income protection are too often overlooked by employers. Those who provide it however, are showing that they recognise the value of their employees and care about their welfare, financial security and that of their families. All of which contributes to a positive workplace culture.
The support an insurer can provide with early intervention and access to specialist rehabilitation services can also help employers meet their duty of care obligations and optimise an employee’s opportunity to return to work.
The ability to support absent staff financially and with their recovery means that valuable expertise is retained within the business and the negative impact of absenteeism on production is minimised.
