How Group Risk benefits can help disabled workers

How Group Risk benefits can help disabled workers

The modern workforce is a hard master to please. Between increasingly bizarre perks and gig economy flexibility, it can be difficult to pin down exactly what is needed from employers.

One area that should be considered more is Group Risk benefits, as Paul Avis, Marketing Director at Canada Life Group Insurance, explained to us. In the third article of the series, Avis reveals why this benefit is becoming more and more necessary to protect employees, should the worse happen and they become disabled or are long-term absent.

“Group Income Protection (GIP) provides a proportion of an employee’s salary every month,” he said. “Should individuals be unable to work through sickness or injury, insurers try to return them to work but if this is not possible then benefits becoming payable after a waiting or ‘deferred’ period.” He adds, “As well as salary, pension and National Insurance (NI) contributions can be covered and benefits can be level or escalate in payment each year.”

Believing the need for this benefit is increasing, Avis states: “From 6 April 2017, applicants for Employment and Support Allowance (ESA) who are assessed as unfit for work but capable of work-related activity (WRAC) will receive a lower level of State benefit which is equivalent to Jobseeker’s Allowance. This means that the value fell from £5,312 to £3,801 per year. For organisations with existing GIP benefits, all schemes with an ESA and WRAC State benefit deductible need to be reviewed. We estimate that as much as half the market is on this basis, so around 8,500 employers and 1m employees’ benefits could be affected by this reduction in State benefits.”

He continues: “We still have other outdated scheme designs, specifically ‘Integrated’ and ‘Net Pay’ schemes. These were created in the 1990s when State benefits were more generous (in terms of monetary amount), tax-free and based on an ‘own occupation’ definition of disability. As a result, they are now expensive, as the contribution from the State has dwindled, benefits are taxable, and have become much harder to qualify for.”

This reduction in State benefits will have a huge impact people that are not insured– can anyone really live on £3,801 p.a. - but also indirectly on employers who may be approached for financial support should an employee be relying on the State when long-term absent or permanently disabled.

So, what could ease this pressure? Well, as Avis tell us: “It’s high time we start looking to Group Income Protection which is being considered as the best way of providing retention of disabled employees and supporting a return to work. GIP was debated in a Government discussion about disabled people and the DWP Green Paper in Parliament earlier in the year.”

He adds even in the existing market there are opportunities: “Many schemes have limited eligibility, so expanding them on a clear Return on Investment (ROI) basis would be welcomed by organisations. Ideally, employers want a standard absence management process rather than one that provides different management routes at different stages for different employee populations.

“With State benefit reductions and affordable benefit options increasing in popularity, now is surely the time to consider getting Group Income Protection for the first time, and importantly for existing scheme holders to review scheme designs.”


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