Legal & General has found that employers overestimate the cost of Group Income Protection schemes by nearly 140%.
Employers surveyed as part of the insurer’s Workplace Wellbeing research believed Group Income Protection (GIP) schemes cost 3.54% of payroll, when actually the typical cost of a good GIP scheme can be around 1.5%.
Once informed of the benefits of a GIP scheme employees were also asked how much they thought it would cost, and they estimated it would be 4.74% of payroll – over three times what it can actually cost. The survey revealed that over four in five (85%) employees would like their employer to provide it and less than one in ten (8%) said their employer already provides it.
Legal & General’s research surveyed 2000 full-time employees and 200 Managing Directors or HR Managers from a range of different sized companies. It has been produced by the FTSE 100 insurer’s Workplace Health and Protection division to raise awareness of how unexpected long-term absence can affect the finances and longevity of businesses across the UK, as well as those members of staff unable to work.
Martin Noone, managing director, Legal & General Workplace Health and Protection, said: “Our research highlights the common misconceptions around the cost of Group Income Protection schemes among employers and employees, and it is the responsibility of both provider and adviser to inform businesses of the many benefits and relative value for money of the schemes.
“Group Income Protection can play a crucial role in helping employees return to work as quickly as possible following an illness or injury and in turn reduce the cost of absence for employers.
“Through our Workplace Wellbeing research we highlighted the surprising frequency of long-term absences amongst employees in the UK and how unprepared many are should they unfortunately suffer a serious illness or injury. Employers have also told us how concerned they are about levels of absenteeism within their businesses and that they would be interested in a solution to help them manage and reduce it, Group Income Protection is one such solution.
“We’ve also shown that, once the benefits of the schemes are understood, employers and employees believe that the value provided is worth much more than the actual cost.”