Income Protection Insurance
In today's demanding work environment, even seemingly resilient employees have found themselves in the position of being unable to work for protracted periods of time. New forms of employment-related illnesses, including stress-related illnesses, are adding to those risks.
The demand for group income protection insurance is continuing to increase. There are three principal reasons for this:
- Organisations are more clearly defining their sick leave provisions within employment contracts, so that there is greater awareness of when the employer's obligations cease and employees' needs for income replacement start;
- Managers do not wish to feel obligated to continue salary payments to an employee beyond the organisation's sick leave provisions, and they are turning to group insurance solutions to meet this obligation;
- Managers wish to place a cap on the contingent liability represented by accrued sick leave provisions across the organisation.
From the employees' perspective, income protection insurance differs from life insurance in that it is a 'here and now' type of cover for which they could receive benefit payments directly and at any time. It is a cover which is relevant to all employees, and not just those who have dependants or financial obligations. For this reason it is a protection which is very much in demand, particularly given that an illness or injury could continue for months or even years after an employee's sick leave entitlement has been exhausted.
Reviewing Existing Arrangements
For organisations which already have an existing group income protection policy, the need for a review and re-tender can arise for a number of reasons. These include:
- The policy becoming uncompetitive following several years without review;
- The emergence of new products, or improvements in the terms of existing products;
- A decision by one or more insurers in the market to aggressively grow market share through attractive offerings;
- Dissatisfaction with an existing insurer due to difficulties with claims, underwriting or servicing;
- Proposed or applied premium increases to an existing policy.
Our Method
The process of evaluating and selecting insurers for group income protection insurance can be complex. Rather than simply comparing gross premium rates, one needs to analyse net premium costs under a range of different scenarios, including claims, benefit waiting periods and benefit payment periods, and a range of benefit options with respect to payment escalation, recurrent disability and rehabilitation. A further factor which is important in the process, and which is often given insufficient attention, is the contractual wording of the proposed policy document.
The consulting service commences with a comprehensive review of the client's existing arrangements and circumstances, and the collating of all required employee data. A competitive market tender is undertaken which, combined with skilled negotiations, ensures that the most favourable offering is obtained from the market. The agreed terms are then accurately translated into a proposed contract by liaising directly with the legal advisers involved. The exercise is completed by carefully managing the transfer of risk to the appointed insurer, and ensuring that no gaps in cover are created. A full policy and claims administration service is then provided on an ongoing basis.
Further Information
If you feel that your organisation could benefit from an independent review of your existing group income protection policy, or if you are considering implementing a new plan, please contact us.
If you are not sure of whether a review is appropriate in your circumstances, or if you would like some indication of the prospective benefits of a review, we can assess your existing arrangements and advise you of the best course of action.