Content Writer
Former Senior Protection Advisor
If you’re looking to support your workforce in case of long-term illness or injury, group income protection insurance could be the solution. Here, we’ll cover everything you need to know, including how group protection works, what’s covered, and where to get the most suitable protection policy for your business and employees.
What is group income protection insurance?
Group income protection (GIP) is a type of insurance that employers can provide to support their employees financially if they cannot work due to illness or injury. Unlike standard income protection, group policies are arranged by companies and typically cover multiple employees under a single plan.
How does it work?
When an employer sets up a group income protection policy, they usually own it and agree to pay the monthly premiums. If an employee is unable to work due to an injury or illness covered by the policy, it will pay a replacement salary (usually up to 80% of gross earnings) after a predetermined deferred (waiting) period.
However, the payments made by the policy for a successful claim are typically paid to the employer - not the sick or injured staff member. The payments are then passed onto the employee through the regular PAYE system as a replacement salary. So, the tax implications for employers and employees need to be considered.
Payments from the policy continue until the employee returns to work, the policy limit is reached (a defined number of months, years, or the employee retires), or the policy term ends. Some group income protection policies also include things like rehabilitation support to help employees return to work sooner.
What does it cover?
Group income protection policies range in terms of what they offer, but policies tend to provide:
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A percentage of your employees' salaries until they return to work or another condition is met (like reaching a certain age or the policy hitting a time limit).
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The employer’s national insurance contributions for the sick or injured employee.
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Long-term benefits like pension contributions, usually with a maximum cap.
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The temporary costs of replacing absent employees until they return.
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A lump sum payment if the employee takes early retirement due to health issues.
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An initial lump sum payment if an employee has a serious problem like a heart attack, cancer or stroke and is unable to work for at least 14 days.
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Support for mental health conditions - which can include stress, anxiety, and depression.
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Rehabilitation and wellness services to help employees recover and return to work quicker.
Coverage and benefits vary between providers, so it’s important to check the specific policy terms before choosing a plan.
Types of protection policies available
There are several different types of group income protection policies, usually designed to suit various business needs:
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Full group income protection: Covers a large number of employees under a single policy with predefined benefits and terms. This can suit larger businesses that need one-size-fits-all cover.
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Flexible group income protection: Allows businesses to offer employees different levels of cover based on seniority, salary, or contract type - which can be helpful for agile companies or start-ups.
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Employer-funded policies: The company pays the premiums, ensuring employees receive benefits without personal cost. Usually, the group income protection benefits for employees are not subject to P11D benefit in kind tax with this set-up.
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Employee-funded policies: This is rarer, but under this arrangement, employees pay some (or all) of the premiums and can sometimes select the level of cover - offering more control and autonomy for employees.
How your application gets assessed
When applying for group income protection, insurers conduct a thorough assessment to determine your policy terms and premiums. The key factors they consider include:
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Company size: Larger businesses with more employees typically get more favourable rates per head, as the group risk is spread across a bigger pool and insurers like to attract large clients.
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Industry and risk: Higher-risk industries, like some forms of construction or manufacturing, can lead to higher premiums due to the increased likelihood of workplace injuries or illnesses.
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Employee demographics: This can be hard to judge precisely, but some insurers will want an idea of the ages, medical history, and lifestyle factors of employees. Opting for policies that accept pre-existing health conditions often results in higher premiums or policy limitations.
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Level of cover: The percentage of salary covered, how long benefits last, and the duration of the deferred period all influence the price. Shorter deferred periods and longer benefit durations generally lead to higher premiums.
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Definition of incapacity: Various insurers have different definitions for incapacity. Typically, insurers with a broader view of what’s considered ‘incapacitated’ will mean a more expensive policy.
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Existing benefits: Some insurers consider the presence of other workplace benefits a positive, such as private medical insurance or occupational health programmes, because it could reduce the overall risk of long-term absences.
Underwriting processes can vary, with some policies requiring limited medical underwriting - while others, particularly for smaller groups, may require detailed assessments.
Get an income protection quote online
Finding the right group income protection policy for your company can be complex. There are plenty of options out there, and the right cover depends on your business structure, industry, and workforce.
An expert insurance advisor can provide tailored quotes faster than online comparison platforms because these platforms can’t factor in all the nuances involved. Advisors can quickly assess your company’s specific needs and match you with the most suitable provider.
If you want a free, no-obligation initial chat with an advisor specialising in group income protection insurance, you can get started here:
Get a bespoke group income protection quote
Is group income protection insurance worth it?
Group income protection insurance can offer significant benefits for both employers and employees, including:
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Financial security for employees in case of illness or injury.
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Reduced levels of absence and quicker return-to-work times.
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Enhanced employee well-being and workplace satisfaction.
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Competitive benefits packages to help you keep and attract the best talent.
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Current tax rules mean premiums are an allowable business expense.
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Usually, no ongoing costs for the employees.
How much does it cost?
The cost of a group income protection policy varies depending on multiple factors, including:
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Size of the workforce.
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Industry risk level.
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Typical salaries across the company.
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Level of salary replacement (50% - 80%).
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Policy duration (fixed number of years or indefinitely).
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Deferred period (4, 8, 13, 26, or 52 weeks).
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Existing company health policies (like private medical insurance).
Speaking with a specialist advisor can help determine the most cost-effective group income protection policy for your business.
Best group income protection providers in the UK
The right provider will depend on your business needs, but here are some of the most popular UK insurers offering group income protection:
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Aviva: Group income protection insurance can cover up to 80% of employees’ salaries, and the policies focus on early intervention, rehabilitation, and well-being. As a result, they claim it helps 83% of employees return or remain at work.
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Zurich: Group income protection from Zurich can cover up to 80% of employees’ salaries and provide cover for employers' pensions and national insurance contributions. They also offer the option of an “Automatic Acceptance Limits” benefit - and under that level doesn’t usually require underwriting
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Legal & General: Any business with 10 or more employees can get group protection insurance with L&G. Their policies can cover up to £350,000 per employee and total pension contributions of up to £75,000. Also, most employees can usually be insured without lengthy medical underwriting.
Keep in mind, group income protection insurance policies can vary in terms of costs and benefits. The best way to see all your realistic options is to get a specialist advisor to show you what’s available.
Why choose Teito for your group income protection insurance?
Finding the best group income protection insurance policy isn’t always straightforward. Your business’s circumstances and needs will be unique, but expert support ensures you get cover that works for your company, at a reasonable cost.
Our experienced advisors can find the most suitable and affordable group income protection policy for your company goals. They can do this because they have extensive knowledge of insurers who can offer the best group income protection options for any business.
Here are some more of the reasons employers choose us to find them group income protection insurance:
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We can get tailored quotes for group income protection
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Our advisors have 5-star ratings on leading review sites
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Your first chat is free, with no obligation to proceed
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Access to specialist insurers with exclusive deals for businesses
Ready to take advantage of a free, no-obligation chat with an advisor specialising in group income protection insurance? Get started here.
FAQs
Employer-paid premiums are usually tax-deductible as a business expense. Monthly payments from a group income protection policy paid to employees are usually subject to income tax and national insurance at their relevant rate.
Choosing an Adviser
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Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.