Group Income Protection
What is Group Income Protection?
Under a Group Income Protection plan, an income benefit is paid to the employer, if your employees (the members) are unable to work because of disability caused by sickness or accident.
The employer will be responsible for passing the benefits to the member as salary, after deducting Income Tax, National Insurance (NI) contributions, Pension contributions etc.
The benefit is paid, basically, as compensation for loss of earnings and will normally start at the end of an initial waiting (or deferred) period. This deferred period is typically 4, 13, 26 or 52 weeks long (although other deferred periods may be available depending on which provider is chosen) and is payable until the member either returns to work, dies or the policy term expires. The policy term is normally linked to the members normal retirement age.
The level of premium for the required amount of cover will depend on the type of plan and the company chosen. Some companies offer guaranteed fixed premiums, other plans reserve the right to review premium levels.
The definitions of disability vary considerably. Generally, in order to make a valid claim, the member must demonstrate that he/she is ‘totally unable by reason of sickness or accident to follow his/her own occupation’ or ‘his/her own and any other for which he/she is suited by reason of experience and/or qualifications’ (known as ‘any suited’) or, indeed, ‘any occupation whatsoever’. The definition of disability, i.e. whether ‘own occupation’, ‘any suited occupation’ or ‘any occupation’, is obviously crucial for underwriting and claim purposes and will affect premium rates. Clearly own occupation offers greatest protection.
Find out more in our Group Income Protection Guide
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