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Group income protection

Group income protection

7 Jun 2021

Group income protection (GIP) is a type of income protection offered as an employee benefit by businesses. Just like personal income protection insurance, it means that you’ll be provided with a percentage of your salary every month if you get ill or injured and become unable to work. But how does it work for employers, and how does the claims process work? What does it mean for you? 

Let us break it down for you. 

What is group income protection?

Group income protection is bought by companies and allows them to pay their employees a percentage of their salaries if injury or illness results in them being signed off from work for a prolonged period. Some policies will also include cost cover for rehab support if needed, in order to help get employees back to work as soon as possible. 

As part of a group income protection plan, employees are entitled to up to 80% of their monthly salary, and cover can be provided for national insurance contributions and pensions.  When a claim is made, the money will be paid to the business who will then pay it out to the employee just like they would pay a salary. If you are an employee who is part of a GIP plan and you need to make a claim, speak to your employer or HR department. 

When a claim is made and approved,  payment starts after a deferral period, and continues then until the employee either returns to work, retires, passes away, or the policy ends. The deferral period is often set at around 3 - 6 months, but could be shorter or even as long as a year. 

Most policies offer cover available for employees aged 16-69. Many also offer competitive Automatic Acceptance Limits benefit, which means that individual employees do not need to be evaluated in order to be covered by a plan. Eligibility for the plan will be agreed on with the insurance provider when the policy is bought, and could include things like: 

  • Minimum/maximum entry wages
  • Qualification level
  • When new employees can join the policy
  • Employees Job grade or job role

What does Group Income Protection cover? 

Cover limits can vary dramatically from one provider to another and depending on the level of cover agreed upon when the cover is bought. In terms of making a claim, the employee will usually be covered for any medical reason they are signed off work.

Many policies can also cover: 

  • The employer’s liability for National Insurance Contributions
  • Pension contributions
  • Rehabilitation costs

It is also normal for the policy to include an Employee Assistance Programmes. This would provide additional benefits such as:

  • 24/7 Virtual GP Services
  • Mental Health Support
  • Life Events Counselling
  • Healthy Living support
  • Legal Support Services 
  • Second Opinion Services

How are premiums for Group Income Protection calculated? 

GIP costs will depend greatly on the insurance provider, but there are a few variables that will definitely be used to base premiums on. 

Most providers will consider the number of people the policy will cover, and then for each of those people there will be more considerations, such as:

  • Age
  • Occupation
  • Age the cover will start and finish
  • Benefit Period
  • Deferral period

The details of the costs incurred will be discussed when you buy the policy. 

For more information or help figuring out GIP, contact us here at LifeSearch to find out how we can help you.

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