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Reasons to consider group income protection insurance

Never heard of group income protection insurance? Well, it offers benefits for business owners as well as the pool of employees it covers. Here’s why you should look into covering your employees with group income protection.

There’s still a substantial proportion of people in Australia who are new to the entire idea of income protection insurance. So, it’s unsurprising that not many people have heard of group income protection insurance, though the concept is very simple!

Group income protection insurance is most often taken out for a pool of employees through a workplace. Each employee is covered by the same policy conditions, and usually has the same premium to pay. Group income protection insurance then offers a range of benefits, both to your employees and to your business. Here are the vital facts about this insurance type.

What does group income protection insurance cover?

If an employee covered under your policy is ‘totally disabled’ or ‘partially disabled’ and therefore cannot work, the group income protection policy pays a benefit. The disability may be due to either illness or injury, but it must prevent your employees from carrying out the important duties of their job.

How does it differ from individual policies?

All group income protection policies are individually created, and will differ amongst themselves. However, the main contrasts with a privately purchased income protection policy are:

  • There is a potential for discounted rates because of the large volume of employees covered under one policy
  • Additionally, because of the large volume of policyholders, special policy extras may be created for the group income protection insurance such as funeral cover, rehabilitation assistance, return-to-work assistance, or bill payment assistance for redundancy.
  • People who were previously ‘uninsurable’ may be covered under the group income protection policy. No individual applications or medical assessments are needed.
  • The terms of the policy are standardised. While this does remove choice and personalisation from the policy, for many employees it actually makes the income protection insurance process easier.

How is it arranged?

Usually, the group income protection insurance policy is arranged by the employer. It may be mandated by an enterprise bargaining agreement, it may be linked to a superannuation fund or it may be organised as a standalone employee benefit by forward-thinking workplaces.

Why buy group income protection?

There are some very significant benefits to arranging a group income protection policy, both for the business administering it and the employees covered under it. The strength and safety in numbers provided by a group policy means that:

For individuals:

  • No medical assessments are required;
  • There are no complicated choices among policy options; amd
  • For some employees, the cost will be much less than if they had taken out a private policy.

For businesses:

  • Employees who feel a sense of caring from their workplace are more likely to remain in their jobs, decreasing employee churn and eventually improving profits;
  • If employees have a safety net in place for disability, they are more likely to be able to return to their original job after their medical issues have been resolved; and
  • In some cases there are tax advantages to group income protection insurance policies.

Under a group income insurance policy, your employees become ‘people, united, who’ll never be defeated’. This type of insurance creates resilience, goodwill and a sense of unity in the workplace – worth far more than the dollars that it initially costs.

– Julian Mattatia is the co-founder of home loans and insurance comparison site ratesonline.com.au.

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