Group Income Protection: Friend or Foe?

We wrote recently about the dangers of setting up your Group Life Assurance incorrectly and why you need to work with your pension advisers to ensure the benefits are structured properly.

Here, we are going to look at the Group Income Protection or Permanent Health Insurance (PHI) product and how it can be made to work better for both employer and employee.

If we go back into recent pension history, the defined benefit or final salary scheme was the accepted way to plan for retirement. Often these schemes had a PHI scheme in the background to protect the scheme assets against ill health early retirement. These elements gave employees a great deal of security against being forced out of work due to ill health or accident.

Now in 2020, there are very few Final Salary Schemes left and with it income protection schemes have become less popular in minds of employers and are often seen as an unwanted expense and a potential barrier to dismissing employees in receipt of the benefit.

If we stopped it there, then most schemes would be cancelled!

However, we need to really consider the benefits such plans bring and how they should form part of an employers’ strategy to become an ‘Employer of Choice’ when looking at their recruitment and retention planning.

We are witnessing more and more employees looking beyond the initial lure of a basic salary increase when searching for a new role and are looking to their employer to provide a range of lifestyle benefits.

Therefore, income protection is a vital tool in the employer’s quest to get the best talent. Many employees now look past the free cup of coffee each week and look to see how they and their loved ones will be looked after if the unthinkable happens and they suffer long term ill health or even die.

Of course, people think it will never happen to them, but just how true is that as circumstances can change in the blink of an eye and younger people in particular are more likely to have a life changing accident than older ones as they take more risks.

So, for the cost of that cup of coffee each week a persons’ income can be protected for life… A true friend for life!

Next time we will explore if these plans save an employer money.

Please call 01423 223640 or email us below for a free, no obligation consultation on how our expert team can help you.