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Getting real about long-term incapacity

5 April 2018

The government support available to those unable to work due to sickness or disability is so threadbare nowadays that the term ‘State safety net’ is arguably no longer fit for purpose.

It is netting of the shabbiest and cheapest kind.  

Most employees who have been ill for at least 4 days in a row (including non-working days) will be entitled to claim Statutory Sick Pay, payable via their employer for up to 28 weeks at the miserly rate of £89.35 a week. After that they may be able to apply for claim Employment and Support Allowance (ESA) – payable at a maximum of £109.65 per week.     

We were therefore not greatly surprised at the results of research published by Canada Life Group Insurance around 18 months ago which showed that the average UK worker expected 70% more than the State actually provided.

It found that, on average, workers thought they would receive £172 a week, with 34% expecting more than £200 a week. It also found that 46% of UK employees would not be able to meet their mortgage or rental payments if they lost their income and had to rely on ESA.

Whilst 44% of employees said they would rely on savings in the event of being unable to work, once again their expectations were highlighted as being wildly unrealistic. The research found that, based on typical expenditure, the respondent’s average savings pot of £8,849 would last a mere 16 weeks.   

Furthermore, it is not only the incapacitated individuals and their families who are impacted when such disaster strikes. It does not normally take long for their fellow employees back at the office to get wind of their plight and to start questioning whether their employer should have been offering more support.  

Once such rumblings of discontent start becoming evident within an organisation they can spread like wildfire, severely affecting morale and productivity.     

Employers should therefore be considering providing their workforce with group income protection cover, which will typically pay out somewhere between half and two thirds of an employee’s salary if they are unable to work due to long-term sickness or disability.

Payments start at the end of an initial deferred period of usually either three or six months.  

Ensuring that employees are protected in their hour of need can help to show that an employer really cares about its workforce, and it can therefore act as a potent recruitment and retention tool.

Additionally, group income protection schemes now commonly offer a range of added-value features like early intervention and rehabilitation services, employee assistance programmes (EAPs) and other useful helplines. These can benefit the bottom line by significantly reducing presenteeism and absenteeism.

Indeed, Canada Life Group Insurance boasts that its early intervention service enjoys an 80% return to work rate within the deferred period, and that 90% of cases do not actually result in a group income protection claim.     

These added-value features can arguably be regarded as even more valuable than the core insurance mechanism, and the good news is that they are not just available on full-blown group income protection schemes that pay out until an employee’s intended retirement date.

Some insurers now include them automatically on budget forms of cover which pay out only for up to two to five years. Such a package, which can cost as little as 0.25% of payroll, can be especially valuable to SMEs which can’t afford to have their own in-house occupational health departments.      

However, the propositions on offer can vary markedly between one group income protection provider and another, so it is essential to seek advice from an expert employee benefit consultant to ensure that you end up with the scheme that represents best value to the needs of your particular workforce.

If you would like to find out more about the potential benefits of group income protection for your organisation and about how Chase de Vere can help you choose the most appropriate scheme then please do not hesitate to contact us on 0345 300 6256 or complete this simple form and we’ll call you.