Insurance policies that employers buy on behalf of their employees is called group income protection. This policy will protect the income of employees in the event of a total or partial disability caused by an accident or illness. It is designed to assist the company’s employees financially if they can’t work due to health reasons that occur outside of the work environment. This can often be very beneficial when it comes to employee satisfaction and of course; retention.  

An employer will pay an agreed-upon premium every month, and a claim will be filed in the event a worker is injured, ill and cannot work. The company usually receives the benefit payout from the insurer; not the employee. They then process the benefit payment through the company payroll system.

You can purchase group income protection for up to 90% of your employees’ gross salaries. A lot of insurers offer different amounts of cover, so speaking with an adviser like Aspect Underwriting is recommended to ensure you get the appropriate amount of coverage. The employer can choose when to make or defer the payments (waiting period), as well as when to start and end the employee’s payment benefits (benefit period). It comes in handy to have expert assistance for these types of decisions to ensure both the company and employees’ benefits are considered.

Insurance companies are likely to offer additional services other than benefit payments to help the organisation cope with the loss of a valuable employee, as well as to help the employee recover so that they can return to work. The advantage to this is not only that it saves you money from having to replace the employee, but it also allows the employee to maintain their skills.

In general, a group income protection insurance policy is paid for by the employer.

Employees can purchase their own individual income protection policies, although it comes without the benefit of a group purchase.Their standalone policies will be much more expensive and provide fewer benefits. If you purchase a policy as a group, an insurer will usually be able to offer you a greatly reduced premium per person for a policy of higher value. Many features of the policy can also be negotiated and included for very little or no additional charge.

A group income protection policy is among the most highly regarded and requested employee benefits, believe it or not! This coverage is often negotiated with employers so that groups of employees can be covered as it offers true protection for employees and their families.

So which one is  better?

Group income protection is smart for everyone to be covered under one plan as it makes it more manageable for the employer. It usually requires a minimum of five employees to be covered for it to satisfy a ‘group policy’. Usually, this type of insurance is part of a comprehensive employee benefits package, which may also include health insurance and life insurance.

Individual income protection insurance can be a better type of policy for an employee who is seeking a more flexible arrangement regarding their personal employment plans.

Contact Aspect Underwriting if you are considering either of these types of policies. The income protection insurance we offer covers a wide range of income protection needs.

Mike Wallis

Mike has over 25 years experience, having spent his first seven years working as a Broker at Jardine Lloyd Thomson in Melbourne and in 2002 was transferred to JLT’s Accident and Health Department in London. For four years (2002 – 2005) Mike was a specialist A&H Lloyd’s Broker and during this time developed excellent relationships with the Lloyd’s A&H underwriting fraternity. In 2006 he returned to Australia in a senior broking position with overall responsibility for Placement Strategy, including the implementation of underwriting facilities and the various authorities granted by Lloyd’s. Mike was the underwriter at two specialist Underwriting Agencies prior to founding Aspect Underwriting in 2016.