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Group Income Protection
What is Group Income Protection?
Group Income Protection (GIP) is an employer-funded insurance policy that provides a regular income to employees who are unable to work due to long-term illness or injury.
It helps businesses support their staff financially during extended absence while also managing costs and reducing the impact of long-term sickness on productivity. For employees, it offers reassurance that their income will continue if they’re too ill to work — often alongside rehabilitation support to help them return when they’re ready.
How does it work?
Under a Group Income Protection scheme:
- The employer pays the premiums and owns the policy.
- If an employee is off work for longer than the deferment period (usually between 13 and 52 weeks), the insurer begins paying a regular income benefit to the employer.
- The employer then uses this payment to continue paying part or all of the employee’s salary, typically up to 75% of their earnings.
Policies can also include:
- Rehabilitation and return-to-work support.
- Access to medical or mental health services.
- Cover for pension contributions and employer National Insurance.
Benefits continue until the employee either returns to work, reaches the end of the benefit payment term, or retires — whichever occurs first.
Tax treatment
- Premiums are usually treated as a deductible business expense if incurred wholly and exclusively for business purposes.
- The benefit received by the employer is generally taxable as trading income, but when it’s passed to the employee as salary, it’s taxed under normal PAYE rules.
Because tax treatment can depend on how the scheme is structured, businesses should seek professional tax or accounting advice.
Who is it for?
Group Income Protection is suitable for:
- Employers wanting to protect their workforce and manage long-term sickness costs.
- SMEs and larger organisations that want to offer valuable employee benefits beyond statutory sick pay.
- Businesses aiming to demonstrate a strong commitment to employee wellbeing and financial security.
Complete the form
Submit the details of your insurance requirements here