The Difference Between Group Protection & Individual Protection

In Business, Employee Benefits, Group Income Protection by Tom Pullinger

It’s a reality that the UK working population is, in general, under-insured. However, some groups are a lot more vulnerable than others when it comes to protection.

Research highlights this… For example, according to Canada Life, while nearly half of women aged 25-45 are solely responsible for the financial decisions in their household, almost 57% of this age group do not have any kind of cover.

Meanwhile, research by Sainsbury’s Bank shows that only 26% of renters have life insurance or critical illness cover, compared to 41% of homeowners.

And a study by MetLife shows that 56% of independent financial advisers (IFAs) believe their self-employed clients do not have sufficient protection to provide financial support in the event they were unable to work.

In other words, you don’t need to look hard or far to see how certain groups are particularly under-protected.

Now, in the UK, there are two major insurance products that provide cover for millions of people: group protection and individual protection. But what are the differences between them and which one is best?

Group Protection

Group protection, also called group insurance, is purchased by a business on behalf of its employees and usually makes up part of the company’s benefits offering. The term ‘group protection’ usually covers several insurance products, including Group Income Protection, Group Critical Illness, Group Private Medical Insurance and Death in Service.

Because Group Risk products are paid for and owned by the company, the rights of individuals are often diminished. However, the premiums for these policies are almost always paid for entirely by the employer.

Benefits for employers:

  • Tax-efficient as premiums can usually be offset against corporation tax
  • Cheaper than individual protection due to economies of scale
  • Helps attract and retain talent.

Benefits for employees:

  • Paid for by the employer
  • More accessible because individual health questionnaires are impractical
  • Group Life Insurance benefits are usually exempt from inheritance tax.

Individual Protection

Individual protection is the term used to describe various insurance products that are paid for by an individual for themselves. It usually encompasses Life Insurance, Income Protection and Critical Illness Cover.

Because the individual pays the premiums themselves, the level of cover can be more tailored to suit their needs. Furthermore, individuals can choose to combine products into hybrid policies for ultimate customisation.

But unlike Group Protection, individual insurance nearly always requires the policyholder to fill out a medical questionnaire, which can be both intrusive and time consuming.

Individuals can often secure very competitive premiums (and lock them in) if they apply while they are still young and healthy. But the reality is many don’t because they don’t see the need for such protection in their younger years.

The bottom line though is as a person’s circumstances change, so too do their insurance needs. For example, getting married, buying a house and having a child are all major life events that often prompt the conversation about the need for protection.

If you’re a business that’s looking to boost its benefits package and start offering Group Rick products, our award-winning team here at Premier Choice can offer advice on the products that are right for you and your employees. Contact us today.

A highly motivated result’s driven individual with a wealth of experience in the Healthcare & Group Risk market. I have established strong relationships with large multinational clients through excellent interpersonal skills. I have advanced listening, negotiating & influencing skills that allow me succeed in a team based environment. I have comprehensive knowledge of the UK Healthcare & Group Risk market. This knowledge has been obtained through the Chartered Insurance Institute & self study.