Wheatcroft explains: “Usually, very few employees need to be underwritten personally. This means that employees can be covered who may, otherwise, be declined or have their premium loaded if they were to apply for a personal policy.”
Group protection can also help clients or employees on a day-to-day basis, thanks to the rise of value added services, which are, in essence, everyday benefits provided by the insurer.
For example, Legal & General provides a virtual GP service, as well as access to a second medical opinion and resources like vocational rehabilitation.
“More and more employers are increasingly interested in health and wellbeing solutions. This trend started well before Covid-19, but the pandemic has escalated this further,” says James Walker, head of product and proposition at Legal & General.
AIG has Smart Health, a service which provides a GP, mental health counselling and nutrition and fitness programmes. Its policyholders found that 33 per cent were able to return to work more quickly after an illness thanks to the fact they had been able to quickly access a GP consultation.
The downsides
As group protection is a one-size-fits-all product, there are some needs it may not meet.
“It can be too generic to cover a wide range of employees,” says Jiten Varsani, a mortgage and protection adviser. “As a result, individual requirements may go unmet, leaving gaps in coverage.”
Having group protection can also create a false sense of security for employees, who may believe that their workplace coverage is sufficient for their personal needs.
This can lead to workers being under-protected. For instance, their death-in-service benefit may not be enough to cover their mortgage if they were to die, and they therefore risk leaving their spouse with a large debt to deal with.
And by its nature, group protection is temporary — you are only covered if you remain with that employer, and your cover could be removed at any moment.
Varsani adds: “This is the most significant issue with these types of policies. They are subject to review and can be withdrawn by the employer in the future. Additionally, as employees frequently change jobs, they may lose their coverage when switching employers.”
While employees could always opt for their own personal cover if they were to change jobs or the benefit was to disappear, it may end up being more costly as they are now older and have health complications. They may even be uninsurable.
Does the insurer always pay out?
While a hefty sum was paid out in group protection claims last year (£2.21bn, according to Grid), the payout rates for group claims are lower than in the individual protection sector.
