1 February 2017
Group income protection scheme products now extend well beyond
offering a core insurance mechanism that pays a regular monthly
income in the event of employees being unable to work due to
long-term sickness or disability.
Insurers now commonly pride themselves on their ability to
prevent claims arising in the first place by intervening early and
working with the employer to provide expert rehabilitation services
to help get employees back to work before the insurance cover kicks
in at the end of the initial deferred period - which typically
lasts three or six months. This facility, for which there is no
additional charge, both helps to reduce absenteeism costs and to
keep premiums affordable at renewal.
Many group income protection schemes also now automatically
include other added-value services which would have a significant
cost if purchased separately. Whilst different insurers provide
different ranges of such add-ons, they can include guidance for
those seeking second medical opinions or practical advice and
emotional support for those suffering a bereavement, serious
illness or long-term disability.
The majority of schemes also now offer an employee assistance
programme (EAP), which can prevent employees taking time off with
stress by offering telephone-based or face-to-face counselling
before problems become too serious. Additionally, EAPs can provide
anything from critical incident support or debt counselling to line
manager assistance and advice on dealing with elderly parents.
Nevertheless, however content an employer might be with their
current group income protection arrangement, the chances are that
they haven't fully communicated the benefits to their workforce.
This means that they aren't securing the optimum potential return
on their outlay because employees cannot value what they don't know
Chase de Vere can help devise a suitable communications strategy
to maximise the benefits of group income protection as a
recruitment and retention tool, highlighting the availability of
the added-value services as well as the insurance cover.
Employers should also regularly review their scheme as this
market never stands still. The competitive position of insurers is
constantly fluctuating as they alter their rating structures and
cover features, and new government legislation, such as changes to
the State Pension age, must also be taken into account.
Once again, we can help as we are fully up-to-date with the
products available and with current legal and technical
requirments. For example, if your scheme still only provides cover
up to age 65, you may decide that it's appropriate to extend it to
cover to State Pension age.
Those seeking to trim costs may also wish to consider whether to
extend their deferred period from three months to six months or
from six months to twelve months - provided that this fits in with
their sick pay strategy and contract of employment. Or they may
want to think about switching to cover that still pays out if
employees are unable to follow their "own occupation" initially but
changes to an "any occupation" basis once a claim has lasted five
years. This approach would at least still ensure that the most
severely sick and disabled remained covered until retirement
An even more dramatic cost-saving step would be to opt for a
scheme that pays out claims benefit for a maximum of somewhere
between two and five years instead of until the employee's intended
retirement age. Although costing less, such limited-term schemes
can still automatically include the added-value features available
on the full-blown formats.
Limited-term cover does, however, come with a major potential
downside. If a severely incapacitated employee ceases to receive
benefit after two, three or five years and is forced to rely on the
extremely limited State safety net, it could undermine the
company's reputation as a caring employer and create considerable
ill-will amongst other workers. Such a step should therefore only
ever be taken after careful consideration.
We would be delighted to discuss such issues with you, to review
your current group income protection scheme and to advise on how to
most effectively communicate its benefits to your workforce. Please
do not hesitate to contact us on 0345 300