Group income protection
Employer-funded sick pay that keeps going. A monthly benefit for employees who cannot work through illness or injury, plus insurer-funded help getting them back to work.
Group income protection funds long-term sick pay for your team. When an employee cannot work because of illness or injury, the insurer pays a proportion of their salary (typically 50 to 75%) to the business after a deferred period, and the business passes it on through payroll. Modern schemes also bring rehabilitation support: insurer-funded specialists who work with the employee and employer on a realistic return to work. For employers, it turns an open-ended sick pay question into a budgeted, insured cost.
Who this is for
- You employ staff and have no clear answer for what happens financially after employer sick pay runs out.
- You have had, or worry about, a long-term absence that the business carried unaided.
- You want a benefits package that competes with larger employers without the cost of matching their salaries.
- You already fund generous discretionary sick pay and want to cap the cost with insurance.
How group income protection works
The employer holds the policy covering a defined group of employees. When a member is off work through illness or injury beyond the deferred period (commonly 13, 26 or 52 weeks, usually set to match company sick pay), the insurer pays the agreed proportion of salary to the employer, who pays it on through PAYE like normal earnings. Payments continue until the employee returns to work, leaves service, reaches the end of a limited payment period, or reaches the scheme's ceasing age, depending on the design chosen.
Benefit design choices
The main levers are the benefit percentage (typically 50 to 75% of salary, sometimes with state benefit offsets), the deferred period, and whether payments run to retirement age or for a limited period (two, three or five years per claim is common and materially cheaper). Schemes can also insure employer pension contributions and National Insurance on the benefit. We design around your sick pay policy so insured benefit starts when employer-funded pay stops.
The rehabilitation support is half the product
Group income protection insurers have a direct financial interest in recovery, and the better ones fund vocational rehabilitation: early-intervention nurses, mental health support, phased return-to-work plans and workplace adjustments. For a small employer with no occupational health function, this support is often worth as much as the cheque. Mental health and musculoskeletal conditions dominate long-term absence, and early intervention measurably shortens both.
Tax and cost
Premiums are typically treated as an allowable business expense and are not normally a benefit in kind for employees; the benefit is taxed through PAYE when paid on as salary. Confirm the treatment for your company with your accountant. Cost depends on the age profile, salaries, industry, deferred period and benefit design; limited payment terms and longer deferred periods bring premiums down sharply.
Free cover and underwriting
As with group life, schemes carry a free cover limit below which members are covered without medical underwriting, which matters for staff with health histories. Only benefits above the limit are individually assessed. Membership data needs the same annual hygiene as any group scheme: joiners added, leavers removed, salaries updated.
How Major Money Matters helps
Specific things we do for this product. No generic platitudes.
Design around your sick pay policy
Deferred period set to where your sick pay actually ends, benefit level set to what the business wants to stand behind. No gaps, no double-paying.
Compare insurers on rehabilitation, not just price
The return-to-work support varies more between insurers than the premium does. We weigh both when recommending the scheme.
Model limited-term against to-retirement benefits
Limited payment periods cut premiums substantially. We price both designs so you choose the trade-off deliberately.
Annual scheme review
Membership, salaries and pricing reviewed every year, and pricing re-tested with a range of insurers periodically as the team grows.
Frequently asked questions
How is the benefit taxed?
The insurer pays the employer, and the employer pays the employee through PAYE, so income tax and National Insurance apply as with normal salary. Premiums are typically an allowable business expense and not normally a benefit in kind for staff; confirm specifics with your accountant.
How long do payments continue?
It depends on the design. Full schemes pay until return to work, leaving service or the ceasing age (often state pension age). Limited-term schemes pay for two, three or five years per claim and cost materially less. We model both for your team.
What counts as too ill to work?
Definitions vary by insurer, and the common standard assesses the member against their own role. Mental health and musculoskeletal conditions are the largest claim categories, and good schemes back claims with early rehabilitation support rather than just assessment.
Do employees need medicals to join?
Usually not. Free cover limits mean most members are covered with no medical evidence; only benefits above the limit are underwritten. Cover for existing staff with health histories is one of the strongest arguments for the group route over individual policies.
Can the scheme cover just some employees?
Yes, schemes can cover defined categories, for example all staff after probation, or management only, provided categories are set objectively. We help you define eligibility cleanly so the scheme is fair, affordable and simple to run.
Is group income protection worth it for a very small team?
Sometimes. Some insurers quote for small groups, but below a handful of members, individual or executive income protection policies are often the better fit. We advise honestly on which side of that line your business sits.
Related
Other protection products that often pair with this one.
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Read moreExecutive income protection
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Read moreIncome protection
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Read moreWhat our clients say
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Put a floor under your team's sick pay
Book a quick 15-minute call with Ollie Allen or one of the Major Money Matters protection team. We will design a scheme around your sick pay policy and quote it with a range of group insurers.
We aim to return your call as quickly as we can. Mon to Fri 9am to 5pm, weekend appointments on request.