Group Income Protection (Group PHI), also known as Group Permanent Health Insurance, is a type of employee benefit provided by employers to offer financial protection in the event that an employee is unable to work due to illness or injury. It is designed to replace a portion of an employee’s income if they are temporarily or permanently unable to work for an extended period, providing peace of mind and financial security during difficult times.
Group Income Protection is typically set up by employers as a group policy, covering multiple employees under one insurance scheme. If an employee is unable to work due to sickness or injury, the policy will pay out a regular, tax-free income, usually a percentage of the employee’s salary (often 50-70%). The exact amount and duration of the payouts depend on the terms of the policy.
The policy typically includes a waiting period (also called a deferred period), which is the amount of time the employee must be off work before receiving benefits. This waiting period can range from a few weeks to several months. After this period, the employee begins receiving the benefit, which can continue for a specified period or until they are able to return to work, retire, or, in some cases, until the employee reaches retirement age.
Financial Security for Employees
Group Income Protection ensures employees have financial support if they become unable to work due to illness or injury, helping them cover living expenses during a challenging time.
Cost Effective for Employees
Offering group income protection can be a cost-effective way for employers to provide valuable benefits to their employees. Employers may also be able to deduct the cost of the policy as a business expense.
Enhanced Employee Wellbeing
This benefit supports the well-being of employees by helping to reduce financial stress during illness, showing that the employer values their health and welfare.
Return to Work Support
Many group PHI policies also include rehabilitation and vocational support to help employees return to work after illness, ensuring they get the care and help they need to regain their health and employment.
While Group Income Protection is an effective employee benefit that offers financial support in the event of long-term illness or injury, promoting employee welfare and helping to reduce financial stress, the coverage might not be as comprehensive as individual policies. It is essential for both employers and employees to understand the terms and conditions, such as the waiting period, the level of coverage, and the duration of payments.
If you have any questions regarding group income protection please get in touch with our team of qualified financial advisers for a no obligation chat.
According to the UK Government website, it was estimated that at the start of 2024 there were 5.5 million UK public sector businesses.
5.45 million of these were categorised as small businesses (with 0 to 49 employees), 37,800 medium-sized businesses (with 50 to 249 employees) and a further 8,250 were categorised as large businesses with 250 or more employees.
It supports employee well-being, aids in retention, and can reduce costs associated with long-term absences.
Policies often cover between 50% to 75% of the employee’s gross salary.
Payments usually begin after a deferred period, such as 26 weeks of absence, and can continue until the employee returns to work, reaches retirement age, or for a fixed period.
Common exclusions include pre-existing conditions, self-inflicted injuries, and disabilities arising from criminal activities.
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