Need for Income Protection Underestimated by 90% of Employees

In Industry News, Protection by PCH Staff

New research suggests that a staggering 90% of UK employees underestimate their chances of finding themselves unable to work due to illness or serious injury. As a result, they are overlooking the need for income protection.

According to the research by Canada Life Group Insurance, when asked about the number of people who are forced to take more than four weeks off work each year because of an illness or injury, 89% of respondents said they thought it was between 1,000 and 100,000.

However, research published in April this year by the Association of British Insurers (ABI) shows that the actual figure is closer to a million – correctly chosen by just 10% of the people quizzed by Canada Life.

In addition, the Canada Life survey also found that 61% of employees – which equates to approximately 19.3 million people – do not have any form of income protection.

Just over a quarter (27%) of respondents said they were prepared to take the risk, while 18% said they don’t think they would ever need income protection. Canada Life says this highlights that many people are taking a ‘head in the sand’ approach when it comes to income protection.

It seems that cost is seen as a barrier by many, with 44% of respondents saying they could not afford to take out income protection cover. This is despite more than a third indicating that they would struggle financially if an illness or injury meant they could not work. For employees with children, making ends meet would be even more difficult, with 45% saying they’d struggle.

Exactly half (50%) of employees surveyed said they would need to get back to work ASAP following an illness or injury, and 62% cited financial reasons as the most important factor for doing so.

A Strong Case for Group Income Protection in Employee Benefits Packages

Canada Life says that employers should consider adding income protection to their employee benefits packages (if it’s not already included). It not only boosts employee retention and attraction, but also provides workers with peace of mind. Furthermore, the fact that it is relatively inexpensive makes it even more advantageous.

Indeed, 43% of employees said that they would feel more valued if Group Income Protection or Group Critical Illness were offered as part of their benefits package. Almost a third (29%) said it would make them more likely to stay with their organisation.

Canada Life Group Insurance marketing director Paul Avis said: “GIP is a relatively minor cost with major potential gains. Not only can GIP prevent valuable staff from taking long-term absence, but it’s a great way of improving recruitment and retention.”

He went on to say that additional employee benefits package elements, like Group Income Protection, make employers “stand out”; especially as many employers are now offering or will soon be offering pensions through auto-enrolment.

The Canada Life Group Insurance research was based on an online survey of more than 1,000 employees during the second quarter of 2016.

There is a perception that group income protection may be cost prohibitive. In fact, this is a valuable benefit to staff and employers alike and can actually help manage absence costs which is a gain in itself.


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