Why you should consider Group Income Protection

By Nathan Munt, Lucas Fettes Financial Planning
Group Income Protection (GIP) is an insurance policy designed to provide a proportion of an employee’s salary if they are unable to work due to illness or injury.

Published in Norfolk Director Magazine Summer | Autumn 2023
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Nowadays, these policies also offer preventative support to employees and throughout their recovery to help them return to work.

As you build your business and your workforce grows, this type of arrangement is valuable as it covers conditions that prevent employees from working in the long-term, both physically and mentally. Group Risk Development (GRiD)* reported that a total of £547.91m was paid out via GIP policies in 2022, with the average claim being £26,755.

If you have yet to put suitable arrangements in place for your business, now may be the time to reconsider.

The benefits for employers

These policies have become a core component of employee benefits packages, helping businesses to attract and retain high-quality employees and promote a positive company image.

Core benefits of GIP policies for employers include:

  • Financial protection from the potential cost of providing long-term sickness income.
  • Prevention resources and rehabilitation support, designed to reduce the length of absences and the number of absentees.
  • Typically, the premiums paid by employers will be tax relievable.

The benefits for your employees

The key benefit of GIP policies for employees is the financial support provided during a worrying time. However, there are other advantages:

  • Rehabilitation support, to help them recover ahead of a return to work.
  • A range of tools and information that promote health and wellbeing.
  • Access to cover they may not be able to obtain personally as there is often no need for medical underwriting.

What you need to consider

Before proceeding, it is important to understand what your business requires.

  • What level of income do you wish to protect? This can differ depending on the seniority of the employees you wish to cover.
  • Will you be insuring salaries only? It is also possible to include a range of other details within the policy, such as employer’s NI and pension contributions.
  • How long will you set the deferred period? This is the waiting time ahead of benefits becoming payable, which ranges from 13 to 104 weeks. This may directly impact the premiums.

Lucas Fettes Financial Planning® is a registered trading name of Lucas Fettes & Partners (Financial Services) Limited and is authorised and regulated by the Financial Conduct Authority.

The insurance protection products discussed in this article are not savings or investment products and have no cash value unless a valid claim is made. The tax treatment of any policy may depend on your individual circumstances and may be subject to future change.

* https://www.grouprisk.org.uk/2023/05/15/employees-benefit-with-2-21bn-group-risk-payouts-in-2022

Why you should consider Group Income Protection 1

Nathan Munt is a Chartered Financial Planner at Lucas Fettes Financial Planning. If you wish to discuss your options, or review your existing arrangements, please get in touch for a no cost, no obligation consultation.

T: 01603 706854
E: nathan.munt@lffp.co.uk
Or visit www.lffinancialplanning.co.uk

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