50% of UK adults do not have any savings or investments and are struggling to put away money (University of Bristol, for Momentum UK, 2016). One in four UK families have less than £100 in savings (Aviva’s Family Finances report, 2017). If your employees are unable to work due to illness or injury the financial impact could be dire.
Group Income protection (also known as Permanent Health Insurance) provides a monthly income to your employees if they are unable to work due to illness or injury. Group income protection (GIP) gives employers an insurance mechanism to provide employees with a regular income if they are unable to work because of long-term sickness or disability.
The employee receives a percentage of their regular monthly salary up to a maximum of 75% (less state benefit deductions). You as the employer decide the percentage you wish your employees to receive under the policy.
There are options on the type of cover to put in place. Standard schemes pay benefits until retirement date, but limited-term schemes pay for a maximum of two to five years, or sometimes up to 10 years. Payments cease if the employee dies during the cover period.
how is it paid for?
This is a company paid benefit, the premiums of company Group Income Protection policies are normally significantly lower than the high street rates
The cost ultimately depends on the amount of cover you wish to provide, the age of employees, their salary and risk level of their occupation.
There are no tax implications for the employee on the premiums the company is paying for the employee to have cover. The income employees receive if they use the policy is taxed in the same way as their regular wages.
Tax relief is normally available on the premiums you pay.
why offer this benefit?
Income Protection promotes loyalty among staff through supporting them financially when they are unable to work. For some employees this product has enabled them to remain in their family home.
Income Protection has also been shown to reduce working days lost per employee via access to rehabilitation and early intervention services. Both the interests of your business and the insurer are aligned in supporting your employee to return to work as soon as they are fit.