Group Income protection
Have you considered what would happen to your business if a key member of staff suffered a serious injury and was unable to work ?
Group income protection
Group income protection aims to provide an income to an employee if they are unable to work long term as a result of an illness or injury. If the policy incapacity definition is met then payment starts after a deferred period. The deferred period is a form of waiting period. It is normally 26 weeks but there’s a range of options to choose from.
The payment can continue until the employee returns to work or, depending on the options chosen, until they reach their state pension age.
It’s designed to help employers by:
- reducing the impact from long term absence costs
- providing support, where appropriate, to help employees back to work
- collaborative absence processes and management information
- helping to enhance employer benefit packages to help you attract and retain the right employees
The benefits to employees are:
- financial support when absent due to long term illness or injury
- where appropriate, fast track funded rehabilitation treatment such as physiotherapy and psychological treatment
- rehabilitation support can be provided throughout absence including support with return to work
The main causes of absence are mental health, musculoskeletal disorders and cancer:
On average, a person is 25% more likely to be off work, 11% more likely to get a critical illness and 3% likely to die.
Key Person Income Protection
Key Person Income Protection can make sure that your business is protected if a skilled employee can’t work because of an injury or illness.
This pays out a monthly income if the person covered is either unable to work because of an illness or injury or is unable to carry out a number of everyday tasks and meets our definition of incapacitated.
Income Protection: There are two versions of this benefit available to choose from:
Key person income protection
Key Person Income Protection pays your business a monthly benefit amount if, due to accident or sickness, the insured person becomes unable to work. This benefit can then be used to either help pay for a replacement employee or to help cover the
loss of profits.
With Key person income protection, you select the appropriate amount of benefit at the start, based on one of the following maximum benefit calculations (subject to a maximum of £250,000 a year):
- 2.5 times the insured person’s income averaged over the last three years;
- 75% of the company’s average gross profits that can be attributed to the injured person over the last three years; or
- loan repayment that can be attributed to the insured person.
Executive income protection
Executive Income Protection pays your business a monthly benefit amount if, due to accident or sickness, the insured person becomes unable to work and so loses taxable earned income. This allows you to insure the taxable earned income of valued employees.
This benefit must be used to help pay replacement taxable earned income to the employee whilst they’re off work and will be paid through the PAYE (pay as you earn) system.
For executive income protection, the maximum benefit calculation will be:
- 75% of the insured person’s pre-incapacity taxable earned income (subject to a maximum of £150,000 a year), plus;
- yearly contribution towards the insured person’s pension made in the previous 12 months by the company, plus;
- employer National Insurance contributions (which can also be protected by the employer up to the amount paid in respect of the insured person in the last 12 months).
Protecting your people and business.
As an employee benefit it provides continuous income for sick and incapacitated employees, helping to relieve money
worries at a difficult time. This valuable benefit can boost morale and help attract and retain the right calibre of staff – factors that are essential to business growth.