Group IP: New product offers lump sum option to fund early retirement
UnumProvident has added a revolutionary new group income protection (IP) solution called Capital Option, to its product range. It has been designed in response to the growing need to manage the cost of sickness absence among employers.
The product, the first of its kind in the market, pays out income benefits for an incapacitated employee for two, three or five years. The maximum basic income replacement benefit insured is £300,000 per employee per year. This amount includes any agreed employee pension fund contributions.
If an employee is unable to return to work by the time benefit payments stop, the employer will receive a lump sum payment, which can be used to pay out an early retirement fund to the employee.
This allows the employer to get an incapacitated employee off the payroll and differs from traditional models where employees remain on payroll until retirement. Many employers have been reluctant to invest in a group IP plan because of the long-term nature of the benefits. UnumProvident however, is hoping Capital Option will go some way to open up the market to more clients.
Ann Hibbard, director of group marketing at UnumProvident said: "Capital Option provides employers with a flexible alternative that may be particularly appropriate for those employers who are concerned about pension scheme funding, or require greater freedom to manage incapacitated employees," she said.
Nick Homer, product manager for IP at Norwich Union Healthcare, said that a more flexible solution would help to open the market up to a fresh pool of clients. "It does make it more affordable to those clients previously out of reach, and as a result, opens up the market to a potentially new client base," he said.
Homer warned however, that the broader issue regarding wellness, absence management and incapacity in the workplace must not be disregarded.
