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Financial Protection Group Income Protection | Group Income Protection |
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What is Group Income Protection? This type of insurance is designed to provide a replacement income if illness or injury prevent an employee from working for a long period of time.  Mostly it is used by an employer to finance an entitlement to occupational sick pay, which arises out of the contract of employment issued to their staff. The employer gets corporation tax relief on premiums and employees do not have to pay tax on the premium paid on their behalf, which is our understanding of current legislation, which may be subject to change in the future. Benefits are paid to the employer to be forwarded to the employee through their payroll system. It is also possible for the employer to insure pension contributions and National Insurance contributions in addition to the basic income benefit. Again, policies place a limit on the amount of National Insurance and pension contribution benefit that can be insured. The employees pay income tax and National Insurance contributions on the occupational sick pay they receive. Group Income Protection policies place a limit or ceiling upon the employees ‘pre-incapacity earnings’ that can be insured. The insurance benefit becomes payable when the member has been ill for some while with the selected benefits then become payable after the end of that waiting period, which is known as the deferred period. Generally, this deferred period can vary but are generally either 26 or 52 weeks, though some policies offer shorter or longer deferred periods. It is important to note that other income received during a claim will reduce the level of benefit that the insurer will pay. Examples of these are, sick pay, commissions, benefits in kind, dividends or State benefits. The advantages of Group Income Protection Group Income Protection can help in attracting and retaining staff as part of an effective modern employee benefits package that will also assist in keeping staff motivated. When employees know they'll be taken care of, financially, fairly and on a practical basis, if they are off work as a result of illness or injury, making it easier to attract and retain good people. They keep their motivation, and, an employer, you keep your staff. Put simply, the main advantages of a Group Income Plan are: □ Attracting and retaining staff □ Keeping staff motivated □ Employee health and wellbeing □ Absence management □ Controlling payroll costs □ Managing pension plans  Who is eligible for such a policy? This policy is open to limited companies, PLC’s and partnerships. Generally, to be eligible, employees must be aged between 16 and 64. Normally, such schemes can be set up with only three employees. How much will it cost? This will depend upon, the number of people in the scheme, the age, sex, location and occupation of each person in the scheme, the selected deferred period, how long the benefit is to run, and the selected level of cover chosen. The above are intended as guidelines only, and should not be taken as any form of recommendation or construed as advice. |
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