Group Risk Products

Group Income Protection:

Group Income Protection (GIP) provides a continuing income for employees if illness or injury prevents them from working for a prolonged period of time.  It can also replace lost income where an employee has to take a part-time or lower paid position because of illness or injury. A GIP policy is used by an employer to cover a contractual promise of long-term sick pay to employees.

Benefits kick in after a prearranged waiting period – usually around six months – and can be payable until retirement or for a fixed payment period. Where a fixed period is chosen, employers can also insure an additional lump sum, payable at the end of the fixed period, which could be used to enhance an early retirement pension or to make a redundancy payment.

Most policies integrate to some extent with State incapacity provision.

Currently GIP benefit is not commonly provided as a flexible benefit although it can be.

There is no prescriptive legislation governing the structure of a GIP policy so there is more scope for insurers to develop differing propositions. In recent years, this has encouraged insurers to pioneer vocational rehabilitation services, interventions and case management services for employer/employees.

The employer usually gets corporation tax relief on premiums and benefits are normally paid to the employee via the employer’s standard payroll system on a monthly basis. The employee pays income tax and National Insurance contributions in the normal way. Premiums are not treated as a P11D benefit for employees.

Expert advice should always be taken when setting up a group insurance scheme to ensure optimum cover is provided and all tax efficiencies are maximised.