Despite the many benefits group income protection provides to employers, our recent employee benefits research found just 12% of employers surveyed provide it for their staff. The same research found that group life insurance was more than twice as popular; 26% provide it, despite the fact group income protection provides more practical and immediate benefits to employee and employer. Why is this?
A lack of awareness and understanding as to the benefits provided is one possible reason. Especially compared to life insurance, which is simple and easy to understand.
Along with a lack of awareness, cost is also a barrier. We asked employers who don’t currently provide group risk products why that is. Cost was the main reason – whether perception or reality. Although the proportion citing cost as the main reason has fallen since last year which suggests employers are starting to realise group risk products aren’t as expensive as initially thought.
So how can we overcome these barriers…?
It’s time to start promoting “employer benefits”
Not just an employee benefit, group income protection is also increasingly being seen as a business benefit. Most group income protection products provide employee assistance programmes which include support for managers dealing with a range of business issues. These resources can be valuable. Especially for small businesses without internal legal or HR advisers. General content and help guides are easily accessible, with telephone support for specific circumstances. For employers who already provide an employee assistance programme, switching to one that is included within group income protection is another great way to save the benefits budget.
Most insurers also provide support to employees from an early stage of their absence; through a programme of vocational rehabilitation. This includes working with the employee and employer to understand the root cause of the absence. Creating a return to work plan and supporting the employee through their rehabilitation. Which may also include funding treatments for the employee to help them back to work sooner, mitigating the loss for the business. Much of this activity happens long before the employee’s absence would trigger a claim payment. But ultimately preventing a long term absence is in the interests of the employee, employer and insurer.
As well as providing important financial protection to employees – the value of which should not be underestimated – group income protection provides clear benefits for business. Advisers should ensure these benefits are a core and fundamental part of any discussion about the value of improving workplace absence, productivity and providing valued long term financial protection.
Get the design right, surely some cover is better than none?
Traditionally employers provided a group income protection benefit to pay a proportion of an employee’s salary until they retire. This was common at a time when the workforce was less mobile. And employees tended to stay with one company for most of their career. Times have changed and perhaps benefits should too. Providing a benefit on this basis is more expensive. So that is perhaps another reason why employers have cited cost as a barrier. These days many schemes are set up with a limited payment term which means a benefit is paid for a set number of years. Usually 2, 3, 4 or 5 years, instead of until retirement. This has the effect of reducing the cost considerably. While the employer still retains all the benefits to the business; access to the employee assistance programme and early intervention in the event of absence to provide vocational rehabilitation.
Here’s a video to help explain…
Lack of awareness and understanding of the product and its components is suggested as a reason for the low take up of group income protection throughout the UK. And indeed the weak appetite amongst employers and employees for the benefit. That is why we’ve created a video to help you explain the benefits of group income protection and what it does to your clients.
In a nutshell
Focusing on the business benefits of group income protection can help to broaden the product’s appeal. And is likely to get more employers interested. Designing the cover to fit an employer’s budget is easily achievable with the use of a limited payment period; now common practice for employers buying the benefit for the first time. Finally, explaining what the product does in simple, easy to understand language – as we’ve tried to do in our video – will also help to better explain the value that both employees and employers can get from group income protection.
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