Group income protection for employers

An employee-benefits broker can help you compare group income protection with the sick-pay promise you already make. Ask who will check the proposed cover, explain the claims process and work with you and the insurer during an absence.

This guide is published by Alltoogether, a UK employee-benefits broker. See how our service works and how to choose a broker.

Start with the employment contract and sick-pay policy. Write down what the employer promises to pay, when that changes and when it ends. Then place the proposed insurance terms alongside it.

Existing contractual sick pay is a reason to examine the funding carefully. It does not automatically make income protection unnecessary. The employer promise and the insurer's obligation are different documents; ask your advisers to identify gaps between them.

Do not wait until sick pay runs out to find the insurer's notification deadline.

A percentage of salary is only one part of a quote. Ask what earnings means: basic salary, an average, or a definition that includes specified variable pay. Then ask which deductions apply and whether pension contributions or employer National Insurance are insured separately.

Compare the benefit duration and any increases during payment. A limited payment period and payment to a stated termination age can produce different protection even where the initial percentage is identical. L&G's published product information illustrates these choices; other schemes must be checked on their own terms. [S06]

Record each answer in pounds for your actual scheme comparison, with the calculation and source definition attached. Keep any employee illustration separate from take-home pay until payroll has checked it.

The policy's definition of incapacity governs the insured claim. A medical certificate or the employer agreeing that someone should remain off work does not itself settle whether the insurance definition is met. Definitions and the evidence required need checking in the technical wording. [S07]

Ask the broker to explain the precise definition being quoted, whether it changes during a claim and how it addresses the person's occupation. Ask how partial incapacity, a phased return and a later recurrence are assessed. Avoid reducing the answer to a label without its wording.

An employer should be able to answer: which document determines sick pay, which determines the insurance claim, and who can explain a disagreement between them?

A free cover limit is a threshold for cover without individual medical underwriting, subject to the scheme's conditions. It does not mean unconditional cover. Actively-at-work requirements, benefit increases and transfers from another insurer may need separate checks. [S06, S07]

At renewal, ask for a list of outstanding underwriting decisions through the agreed secure process. Establish what temporary cover, if any, applies and what remains unconfirmed. Include people away from work in the transfer discussion before accepting a switch.

Some schemes include early intervention and rehabilitation services. L&G describes support that can be requested before an income claim becomes payable. Access to support and acceptance of the insurance claim are separate matters. [S06]

Ask which services are available in your scheme, who can request them and what consent is needed. Keep the service instructions accessible to whoever manages absence. Check whether a service remains available when employment or insurance cover changes.

Insurance support should sit alongside the employer's own management of work, adjustments and communication. Refer employment decisions to the appropriate adviser; do not assume an insurer's claim decision answers those questions.

HMRC says an employer's scheme is not itself a taxable benefit for the employee unless provided under optional remuneration arrangements. Payments that do not qualify for an exemption are taxed as employment income. Employee contributions from taxed income can affect the position, while salary sacrifice is not treated as an employee contribution for this purpose. [S08]

Have payroll confirm the proposed arrangement and deductions before issuing an employee example. A headline insured percentage is not a promise of the same percentage of previous take-home pay.

Before changing insurer, ask how existing absences, accepted claims, pending claims and later recurrences will be handled. Obtain a written answer identifying which insurer is responsible for each situation.

Before a dismissal, settlement, business transfer or change in employment terms involving a claimant, obtain employment advice and confirmation of the insurance consequences. Do not tell an employee that benefits will continue or stop without checking the arrangement.

Can the broker reconcile the insured benefit with the sick-pay promise? Are the earnings definition and member data current? Which members still need underwriting? What changed in the incapacity definition, deferred period, duration or escalation? What support is available before a claim? Who owns notification and payroll reconciliation?

Keep the answers and the policy references together. These questions give the next HR or payroll owner a usable record when the person who arranged the scheme is away.

The renewal health check gives a dated timeline for asking them, counted back from your renewal date.