Businesses rely heavily on the people who work for them. But what happens if one or more of the team need to be off work for a period of time due to injury or sickness? Often working to tight margins, businesses can’t always afford to pay employees for longer periods without their physical input, especially if overtime or a temporary employee has to be paid to cover the absentee.
There is a solution to this problem, however. Group Income Protection can be an effective way for an employer to provide for employees taking paid sickness absence, help them reintegrate into work and it can also give significant benefits when attracting new staff, too, when offered as part of an employee benefits package.
What is Group Income Protection Insurance?
Group Income Protection (GIP) will pay any employee, who is insured under the plan, an agreed proportion of their wages if they are too ill or injured to work. This means that the employer has less financial worries in paying them, and the employee knows that they will receive a monthly income. Group Income Protection, therefore, not only helps sick or injured employees, but the employer and the entire business. Policies are also available which are paid for by employees, where they want more cover than the employer can offer. Most commonly, cover is paid for by the employer.
What questions should I ask a Group Income Protection (GIP) insurer?
There are many insurers offering Group Income Protection insurance (GIP), but as with most buying decisions, it is worth considering certain factors and asking the right questions of your Group Income Protection provider.
1. How long has the insurer provided GIP for?
Experience is key, and the longer an insurer has provided GIP for, the more understanding they will have of dealing with claims, absence management and rehabilitation. It is likely to mean that they will have understood the market and be able to tailor the cover provided. Wiltshire Friendly was established in 1887, and started offering Group Income Protection over 15 years ago, so is experienced in helping employers and employees in their time of need.
2. How flexible is the cover?
There are two key considerations. How quickly can the cover start and how long will it pay for?
The shortest starting period is normally 4 weeks, so as soon as the employee has been off for 4 weeks, the claim payment can begin.
Claim benefit payments can then be paid for a fixed period, from 6 months right through to retirement.
These options enable the employer to match their requirements against a chosen budget.
3. What’s the service like?
Is it still possible to get a personal service from your insurer? That would mean named individuals to speak to if you have a query, need to amend something or want to claim. Once the plan is set up and running it should not be difficult to make contact, either for yourself or through your financial adviser.
4. Does the insurer pay claims?
Claims payment rates are published by insurers. At the end of the day, whether the plan will pay out when you need it is the true test of the value of what you have taken out. Ask your insurer to show you their claim payment rates. Here at Wiltshire Friendly, we are very pleased with ours.
5. How much will it cost?
Interestingly, not the first question! Yes, price is obviously a consideration, and make sure you are comparing like with like if you are looking at different provider quotations and be clear on the associated benefits and plan terms matching your specific requirements.
What are the benefits of Group Income Protection plans to an employer?
Statutory Sick pay (SSP) is currently £116.75 per week for a maximum 28 week period. This is a cost to a business and often far less than an employee needs to pay their bills. As an employer who cares for their employees, you may already pay more than SSP yourselves, but this is an expense to the business on top of any overtime or temporary workforce payments to cover the work of the absentee. Group Income Protection plans will benefit both the employer and employee.
There are many benefits to having a Group Income Protection plan, but key ones are:
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A GIP plan offering is a great employee benefit for existing staff and can help attract new employees.
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Focussing on staff wellbeing could mean less short or long-term sickness.
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The potential cost of sick pay to the business is reduced with a planned, regular premium paid to the insurer instead.
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Employees realise that their employer cares about their welfare.
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In most circumstances Group Income Replacement premiums count as a business expense for tax purposes. (current legislation and HMRC practice)
How Wiltshire Friendly can help
Wiltshire Friendly Society is a specialist income protection provider and a proud member of the Association of Financial Mutuals (AFM). Providing flexible plans for employers for the benefit of their employees, we would love to talk to you about your requirements.
Contact us today.