Group Income Protection



27 July 2021

“GIP [Group Income Protection] insurance products offer one way for employers of all sizes to access a range of expert-led support should it be required, such as counselling services, OH [Occupational Health], or vocational rehabilitation, as well as the provision of income in the event of sickness absence.”

The above quote is taken directly from the Government’s long-awaited response to the “Health is everyone’s business” consultation.

The consultation – which aims to reduce ill-health related job loses across the UK – began way back in 2019, and has (understandably) been rather overtaken by events ever since its initial publication.

A renewed focus on health & wellbeing?

Because the COVID-19 pandemic has provided a focus on health and wellbeing like no other single event of modern times, and accordingly the need for government and employers to provide a robust framework to tackle the societal and business ills of long-term ill-health and resultant job losses has never been more necessary. 

Indeed the consultation confirms that prior to the pandemic around 1.4 million working-age people had at least one sickness absence lasting four weeks or longer in any given year. 

At the time or writing it’s very difficult to say if that number has changed, not least because many employers may have probably struggled to accurately record sickness-absence during periods of furlough and/or home-working. 

But it does seem likely that the longer-form of COVID-19 infections – so called Long Covid – will ultimately add to the number and duration of lengthy workplace absences, and sadly might also contribute to the numbers permanently forced out of the workplace by their ill-health too.

So the need to find solutions to long-term health issues is front of mind for the government, employers, employees, and (of course) the employee benefits industry also. 

Why Group Income Protection?

And Group Income Protection can play an active part in combatting these absence issues.  Indeed the consultation response also states;

“The government agrees that, where policies are accompanied by high-quality services aimed at preventing ill health and offering support to return an employee to work, insurance products are a valuable source of support, in addition to offering a financial benefit if an employee is unable to work due to illness or injury.”

It’s clear that the government now acknowledge that Group Income Protection provides so much more than just a continuation of salary to a long-term ill employee. 

Indeed Group Income Protection insurers have spent some considerable time and expense building additional services that will help speed the return of an ill employee to the workplace.  These new tools are potentially very important, yet sadly the understanding and appreciation of those benefits has not kept pace with their development. 

How many workers are protected?

This lack of understanding and awareness is perhaps also reflected in the numbers currently covered for this class of employee benefits provision.  For instance Group Income Protection insurance is provided to 2.6 million UK employees, which is far fewer than Group Life Assurance which protects some 9.9 million workers. 

This is a strange miss-match, not least because a long period of sick leave is more likely than death before retirement age – even after 18 months of a pandemic. 

So why the difference in the numbers covered?

One of the key reasons in the past was that the cost of Group Income Protection was perceived to be considerably more expensive than (say) Group Life Assurance.

Yet in 2021 a good intermediary can help a sponsoring employer design a GIP benefit structure which dovetails with the employer’s sick-pay policies, help speed the return of an ill employee to the workplace, and also (of course) protects the worker’s income stream if an early return is not possible. 

And all the above can often be delivered at a price-point which is far more acceptable to employers than was once the case.

So, with costs now controlled, useful tools to help the employee return to work more quickly, and (of course) that government endorsement last week, now might be the time for many more businesses to again consider introducing Group Income Protection to protect both their workers income and the employer’s absence record.

For more information on any of the above topics, please speak to your usual Howden Consultant in the first instance, or visit our website for other contact options.  For the latest details on COVID-19 & Employee Benefits provision please visit Howden’s coronavirus hub.

Published 27/07/21

Steve Herbert

Steve Herbert

Steve is Head of Benefits Strategy, Howden Employee Benefits & Wellbeing, and is an award-winning thought leader on Pensions, Employee Benefits, and Human Resources issues. He is occasionally accused of making Employee Benefits interesting.

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