Keeley & Co - Independent Financial Adviser and General Insursance Birmingham
Keeley & Co - Independent Financial Adviser and General Insursance Birmingham
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General Insurance
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Tax-Free Benefits for Directors and Employees
Group Income Protection for Small Companies


Group Income Protection for Small CompaniesThere is a range of benefits which can be included as part of the reward package provided by employers to enhance relations and improve staff welfare. 

A Group Income Protection Scheme helps to ensure employees can cover their regular outgoings without having to rely on state benefits, use their savings or borrow money during long periods of absence from work caused by illness or injury.  A Group Income Protection Scheme can also assist with rehabilitation so that a claimant can return to work in good health sooner, or help replace lost income if an employee has to take a part-time or lower paid job.   Full and part-time employees can be insured as well as fixed term contractors.

Premiums paid will usually be guaranteed at the same Unit Rate for 2 years. For tax purposes the premiums paid by the company are usually treated as a trading expense and are not usually taxed as a benefit in kind for employees   Once a Scheme is in place, the insurance provider  cannot cancel the policy, unless premiums are overdue or there is non-disclosure of information at the policy installation or when claiming for benefit.

Employers can decide when they take out the policy who will be covered, when they will be included in the scheme, what benefit is to be insured – a typical benefit is 50% of earnings - how soon after injury or illness the benefit is to be paid (a ‘Deferred Period’ from 13 to 52 weeks), and for how long the benefit will be paid (to limit costs choose payment period of  3 to 5 years  or, more costly, payment up to planned Retirement Date) .

There are alternative definitions for ‘incapacity’ for instance ‘current occupation cover’ will mean an employee is unable to perform the material and substantial duties required of them in their own job.

If there are enough members in the Scheme the insurance provider will set a generous “Free Cover level “.  This is an amount of Benefit below which no details about the individual’s health & lifestyle are required before the individual member is covered by the provider.

The likely level of costs for a typical scheme can be 1% to 2% of total payroll a year.

If you are interested in getting a quote for the costs and benefits to design a new Group Income Protection Scheme for your directors and workforce, please contact us here.

The information contained within this website is subject to the UK regulatory
regime and is therefore primarily targeted at consumers based in the UK.