How Does Group Income Protection Measure Up?

If you have the option of joining a group income protection scheme you might want to know how it measures up to the alternative products you could consider instead.

Read on or click a link to jump straight to the comparison you want:

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Group vs. individual income protection

If your employer offers an income protection scheme as one of their company benefits, how does it measure up in costs and potential returns if you need to make a claim?

The table below pits group protection schemes head-to-head with individual income protection so you can see which option might be the right choice for you:

  Income Protection Schemes
  Group Scheme Individual Scheme
Owned & Paid for by Employer offers benefit free to employees or on a paid for basis Individual member owns the policy and pays the monthly premimum
Cost Often cheaper than personal cover due to a larger group insured Can be more expensive than a group policy due to the additional assessments
Contributions Either the employer pays contributions or employees can contribute Paid for by the individual from taxed income
Benefits Paid to the employer and passed on to the employee. If employee did not contribute to premiums benefit will be taxable as earned income Benefits are normally paid tax free. Potential to choose features to suit their needs, eg. payment start dates and duration for benefits to be paid
Cover Will usually cease if you leave employment Will continue unchanged, even if you change employer
Health Questionnaire Not normally required due to the nature of group policies Required. Any pre-existing conditions might be excluded
Medical History Not usually an issue, providing you’re fit to work when you apply for cover Previous poor health may influence the price of cover

If you’d like to talk to an independent financial advisor about your options and get advice tailored specifically to your circumstances, get in touch for a chat and we’ll introduce you to one of the experts we work with.


Income protection vs. critical illness

While critical illness cover will provide a one-off lump sum payment in the event that you’re diagnosed as critically ill, income protection provides a regular stream of income in the event that you are unable to work due to long-term ill health.

Both insurance products give you protection in the event of long-term ill health. They also each offer you the freedom to spend the proceeds of a claim however you want or need to sustain yourself and your family during a difficult period.

So how do they compare and which one is right for you?

The table below illustrates some of the key differences between the two protection policies:

  Group Income Protection Critical Illness Cover
Cover Provided A portion of your current salary A lump sum to use on treatments, pay off a mortgage or provide for your family
How a Claim is Paid Monthly, usually for a limited period, depending on the kind of cover you have. Provides income until you recover or have found another way to earn your living One-off lump sum payment
Disability Payment Will pay for disability as long as it prevents you from being able to work Disability must be total and permanent, with no chance of recovery
Amount of Payment Up to a defined percentage of your gross monthly income, subject to specific policy limits. Usually set at between 65% and 80% of your income Pays the full amount of whatever sum you insured when taking out the policy
Illness Types Covered Policy will pay out in the event of any illness or injury which prevents you from being able to work Policies have a list of critical illnesses covered. Any illness not on the list will not be considered payable
Policy Termination As long as the policy is maintained, you can make multiple claims for different conditions Once a lump sum payment has been paid, the policy ends
Joint Policies Available? Taken as a standalone policy Can be taken as an option with various other protection products

If you’re weighing up whether you’d be better protected with an income protection product or critical illness cover, speak to one of the experts we work with. They will assess your circumstances and make personalised recommendations based on your financial situation and specific requirements.


Group income protection vs. permanent health insurance

Group income protection is often thought of as very similar to permanent health insurance or PHI yet, while the two insurance products might appear almost identical, the way the two policies are underwritten and priced can vary greatly.

The table below positions the two products side-by-side to provide an easy way to help you decide your preferred type of cover:

  Income Protection Permanent Health Insurance
What is covered? Loss of income due to injury or sickness Loss of income due to injury or sickness
When will it pay out? Most policies come with a deferred period, but you can get cover which will pay out on day one of an illness or injury Most policies come with a deferred period, but you can get cover which will pay out on day one of an illness or injury
How is benefit paid? Monthly Monthly
How much benefit can I get? Depending on the policy and provider, usually between 50% and 70% of your gross income Depending on the policy and provider, usually between 60% and 75% of your gross income
How long is benefit paid? Until you’re well enough to return to work or reach the selected retirement age Until you’re well enough to return to work or reach the selected retirement age
Additional Useful Info Covers income if you’re unable to work and earn a living due to illness or injury. You won’t be able to make a claim if you can’t prove your earnings. Since you’re insuring a percentage of your salary, you’ll need to let your provider know if your income changes to avoid being over or under insured. Mostly underwritten based on occupation so people who work in jobs considered to be higher risk tend to pay far higher premiums or cannot get cover at all

Speak to an expert

If you want to make sure you can meet the needs of yourself and your family in the event of illness and aren’t sure how best to protect yourself, get in touch for a free, no-obligation chat and we’ll match you with one of the financial advisors we work with.

All the advisors we work with are experts in their field, we’ll connect you to someone experienced in helping customers protect their financial situation in the face of unavoidable adversity.

As independent advisors, not only will they be able to advise you of the most appropriate product for your circumstances, they’ll also be able to use their whole-of-market access to ensure you get the right cover for the best available price.

There’s no obligation to proceed and all the experts we work with are independent financial advisors qualified to give advice and regulated by the Financial Conduct Authority.
Call 0808 189 0463 or make an online enquiry to get started.

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