United Kingdom

GIP products ‘jewel in crown’ of employee benefits, GRiD says

December 2018

Employers offer group income protection (GIP) products to staff to help improve recruitment and retention, research has shown.

Industry body Group Risk Development (GRiD) which surveyed businesses across the UK found that this was one of the main reasons why GIP benefits were offered by 29 per cent of employers. 25 per cent of businesses also said they offered GIP products because they believed it helped improve productivity and morale while an additional 29 per cent said they believed it was their responsibility as employers to help look after staff and families.

Catherine Stait, principal at Aon, agrees GIP is a key element of robust benefits packages. “Income Protection offers employees financial security and helps employers meet their legal obligations, including workplace adjustments and return to work strategies, accessing free provider services and expertise. This is particularly valuable for smaller employers, where bespoke services and pathways would be less affordable.

“In addition, a commonly overlooked bonus of having an insured GIP scheme is the employer can rely on the government ‘exemption’ for legally ceasing to provide or offer GIP benefits at a certain age. Without insured provision, the cease age could be open-ended. However, with the continuing shift in responsibility for employees’ health and wellbeing from the government to employers, GIP providers need to be mindful of the challenges employers face, including monitoring absences and sustainability of premiums.”

Other reasons businesses gave in offering GIP products were around long-term absence management (23 per cent) and tax efficiency (20 per cent).

30 per cent of employers said that Statutory Sick Pay was ‘insufficient’ to support staff who are unable to work so GIP products helped fill the income gap.

Spokesperson for GRiD Katharine Moxham said GIP products were ‘the jewel in the crown’ of employee benefits as they not only provided financial support for those unable to work due to illness or injury but facilitated access to specialists.

The reasons employers gave in offering GIP products differed depending on the size of the business, the research found. Smaller organisations tended to feel a more moral obligation towards their staff and found GIP products to be a cost-effective way to provide support for staff suffering from illness or injury.

Moxham added: “The product name ‘Group Income Protection’ probably disguises the increasingly comprehensive list of additional help and support services included and also, because employers often think GIP is more expensive than it is (74 per cent of employers overestimated the cost of providing GIP to all their staff), it may not be given the attention it deserves.”

Stait added, “As with most insurance, the value of GIP cover may not be recognised until it needs to be used. A targeted communications or financial wellbeing strategy, perhaps even one which uses differing generational approaches, is essential to ensure employees understand and appreciate the benefit.”

 

Aon UK Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN.