02/12/2020

5 mins

Group Income Protection (GIP) and Group Critical Illness Cover (GCIC) have certain similarities. However, there are also major differences between the two. It’s important to be aware of these similarities and differences so you can pick the best protection for your workers.

Which option is right for you and your business? Read more below.

What Is Group Income Protection?

Group Income Protection pays employees a regular monthly income if they’re off work sick, allowing them to keep up with essential monthly outgoings.

The payout is equivalent to a proportion of an employee’s wages.
Workers receive a payout after they’ve been sick for longer than the policy’s deferred period.
It’s also known as Group Sick Pay Insurance because it offers sick pay to staff and works in tandem with your organisation’s sick pay policy.

As well as the core benefit, you also typically get additional benefits alongside the policy. For example, these packages often include counselling or physiotherapy.

These additional benefits address issues such as stress and musculoskeletal problems, two major causes of Group Income Protection claims.

Through these services, workers are usually back to work sooner than would otherwise be the case. Often, they’re back in the workplace before the deferred period is up and they have to start making a Group Income Protection claim.

What Is Group Critical Illness Cover?

Group Critical Illness Cover also offers a payout if a worker falls ill. However, there are some big differences between the two.

The first difference is that Group Critical Illness Cover pays out a single lump sum equivalent to a multiple of an employee’s salary. Furthermore, a worker has to be sick with a critical illness specified in the policy to claim.

The most common illnesses Critical Illness Insurance pays out on are:

Cancer
Heart attacks
Strokes.

The cash lump is designed to help with everyday expenses as well as cover the cost of any lifestyle changes necessary due to a serious illness.

Key Differences – GIP vs GCIC

It really depends on the type of safety net you are looking to provide for your employees. Both protect against the risk of illness but in very different ways.

Group Income Protection	Group Critical Illness
Payout
Regular monthly income.	One lump sum.
Payouts last for 1, 2 or 5 years per claim or up to retirement depending on your policy.	One lump sum payout equivalent to a multiple (between 1 and 5 times) an employee’s salary.
What’s Covered?
Any illness / injury preventing an employee from working.	Illness must be on a list of ‘critical’ illnesses specified by the insurer.
Taxation
A business expense for the employer allowable against corporation tax.	A business expense for the employer allowable against corporation tax.
Not a P11D / Benefit in Kind.	A P11D / Benefit in Kind.
Payout taxable as income on a claim.	Lump sum payout typically paid tax-free.

Which is Best: Group Income Protection or Group Critical Illness Cover?

Ultimately, the best protection for you and your employees depends on your organisation and your circumstances.

Group Income Protection and Group Critical Illness Cover are each valuable in their own way. However, one may be better than another for your business.

Why Group Income Protection?

If you’re looking to bolster your company’s sick pay policy, it may be worth considering Income Protection. This is because it complements your organisation’s sick pay, working alongside it to offer more comprehensive coverage.

Group Income Protection will also usually pay out in more circumstances than a Group Critical Illness policy.

For instance, bad backs and mental health problems represent some of the most common claims on Group Income Protection policies. Neither of these issues would be severe enough to warrant a Critical Illness Insurance claim.

Why Group Critical Illness Cover?

If you’re only wanting to cover more serious illness — for example, cancer, heart attacks and strokes — then Critical Illness Cover might be a better option.

These serious illnesses are after all what people are most concerned with.

Moreover, the risk of critical illness is often higher than people think. For example:

Cancer Research UK tells us that around 50% of people born in the UK after 1960 will develop some form of cancer.
According to the British Heart Foundation (BHF), more than 100,000 hospital admissions in the UK each year are due to heart attacks. This is equivalent to an admission every 5 minutes.
Similarly (and also from to BHF data), there are more than 100,000 stroke victims in the UK each year, again equivalent to a stroke happening every 5 minutes.

In some cases, a one-off lump sum payment may also be more useful to employees than a regular monthly income. This is especially the case where there are big expenses to meet, such as out-of-pocket medical costs or mobility equipment following a critical illness diagnosis.

Nadeem Farid Head of Employee Benefits at Drewberry

In an ideal world, you might choose to include both in your Employee Benefits scheme.

It often comes down to budget, existing arrangements including sick pay entitlement and your position on how you best want to support your staff.

Nadeem Farid
Head of Employee Benefits at Drewberry

Compare Group Quotes & Get Expert Advice

Whether you eventually opt for Group Income Protection or Group Critical Illness Cover, it makes sense to choose and adviser such as Drewberry to help implement your scheme.

Our employee benefits consultants take the headaches out of implementing a policy. We’ll do all the heavy lifting for you, from sourcing employee data to negotiating premiums to tracking down the best insurer.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

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