Group Income Protection FAQs

 

 

Q: WHAT IS GROUP INCOME PROTECTION INSURANCE AND HOW DOES IT WORK?

A: GIP provides a replacement income if an employee is absent and unable to work due to illness or injury. Schemes can also insure pension contributions and national insurance contributions for employees and the employer to meet your NI (National Insurance) liability. Following an assessment of all the relevant medical information by the insurer, the policy would begin to pay out after a set period of time called the deferred period, usually 26 weeks.

 

Q: ARE THERE DIFFERENT LEVELS OF COVER FOR GROUP INCOME PROTECTION?

A: Yes, cover is usually based on a % of an employee’s earnings e.g. 75%, 50%, this can be based on basic salary or include bonus, overtime, other allowances etc.

 

Q: WHY OFFER GROUP INCOME PROTECTION FOR AN SME?

A: Group Income Protection protects your business and your employees should they become unable to work. It is designed to provide a replacement income for an employee and also to help employers manage long term absence more effectively. By utilising the early intervention services that are included in the policy, a full claim may be avoided and absence periods can be reduced. This can help reduce the overall cost to the business.

 

Q: HOW MUCH DOES GROUP INCOME PROTECTION COST?

A: "The costs depend on a number of factors such as: The employee population Level of benefit to be insured Deferred period before a claim can be admitted Our Business Development team will be able to talk you through the various options available and how this can affect the scheme costs."

 

Q: DO BUSINESSES NEED GROUP INCOME PROTECTION?

A: "While it’s not a legal requirement for companies to have Group Income Protection, it is a great benefit for employees and there are many advantages in doing so: Helps to attract and retain top staff Provides financial peace of mind to your employees. Can help to reduce costs of absenteeism from sickness and injury Some policies can cover your NI Liabilities and pension contributions Elect’s Business Development team can help you choose the right policy for your company."

 

Q: WHAT ARE THE TAX IMPLICATIONS OF GROUP INCOME PROTECTION?

A: "There are two main tax considerations employers’ needs to be aware of: Premiums paid to provide cover for employees are tax-deductible and treated as a business expense. Income benefit received by the employee as salary replacement is taxed as PAYE. Premiums are not treated as a P11D benefit. This information is based on our understanding of the current UK tax legislation. You should ask your professional tax advisers about the actual implications for you and your employees."

 

Q: WHY SHOULD I CHOOSE ELECT TO PROVIDE MY GROUP INCOME PROTECTION INSURANCE?

A: "Elect offer straightforward solutions with no hidden costs. Our insurance partners provide: Flexible solutions Competitive prices Streamlined administration We can help take the pressure off, allowing you to give your employees a benefit they are sure to value."

 

Q: IS GROUP INCOME PROTECTION RELEVANT FOR SMES?

A: "Group Income Protection (GIP) is a valuable employee benefit and relevant to any employer. Without the financial security net that GIP provides, your employees could fall on financial hardship in the event they are ill or injured and unable to work. A GIP policy allows you to choose cover to complement your existing sick pay policy and to fit within your budget and business needs. This helps to remove the financial pressure from your absent employees so they can focus on getting better and returning to work."

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