UK employees are severely underestimating how common it is to be unable to work due to serious illness or injury, according to research from Canada Life Group Insurance.
Nine in ten (89 per cent) UK employees believe the number of people off work for more than four weeks due to illness or injury each year is between 1,000 and 100,000.
In reality, the Association of British Insurers estimates this figure is around 1 million. Only 10 per cent of respondents accurately estimated this number.
More than three in five employees do not have any form of income protection (61 per cent), equivalent to 19.3 million people.
The ‘head in the sand’ approach is one of the most common reasons for not having income protection, with more than a quarter (27 per cent) of those without a policy saying they would rather take the risk and 18 per cent believing they will never need income protection.
However, with most employees underestimating the chances of this actually happening to them, 45 per cent of workers could be taking a bigger gamble than they realise.
This lack of protection also comes despite recent media coverage following former chancellor George Osborne’s Budget proposals leading 42 per cent of employees to believe there is going to be less funding for State benefit provision. In addition, a third (32 per cent) say recent media coverage has made them think state benefits will be harder to successfully qualify for.
This suggests employees are not confident they will be able to depend on state benefits should they become unable to work. Growing concerns among employees about state benefits could put the need for income protection higher up the corporate agenda as demand for this type of policy increases.
Despite hoping they will never need it, 31 per cent of employees without income protection would be worried about how to survive financially in the event of an injury or illness that prevents them from working, rising to 45 per cent of workers with two children.
Cost is the primary factor for not taking out an income protection policy, with 44 per cent of employees saying they are unable to afford it. As a relatively inexpensive benefit for employers, but one that has huge advantages for staff and also aids employee retention and attraction, employers should consider adding this to their benefits packages.
If employers provided Group Income Protection (GIP) or Group Critical Illness (GCI) cover, 43 per cent of respondents said they’d feel more valued, 41 per cent would be relieved their income was protected and 29 per cent would be more likely to stay within their organisation.
Half of employees agree it would be very important for them to get back to work as quickly and as safely as possible, with financial reasons the most important factor (62 per cent), while around a quarter (23 per cent) also said they’d get bored without a job.
Many GIP products also come with rehabilitation services which enable a return to work as quickly as reasonably possible, offering clear benefits to both employee and employer.
Paul Avis, marketing director of Canada Life Group, commented the traditional argument that loss of income through injury or illness ‘won’t happen to me’ highlights a worrying lack of understanding among UK employees.
“That so many people underestimate the actual likelihood by up to 1,000 times goes some way to explain why take-up of both individual and group income protection remains low. This should be the priority benefit and much more widespread,” he stated.
“Growing concerns over the provision of state benefits could force GIP higher up the corporate agenda. Recent media coverage means state benefits are perceived as being harder to apply for and receive, with less funding available.
“Separate research also shows that six in ten people do not believe the welfare state can be relied upon to support those in need, underlining a lack of trust in the benefits system. This only increases the importance of GIP, not least because early intervention services also provided within GIP aim to help employees back to work before they need to apply for state benefits.
Mr Avis added that from an employer’s perspective, 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. Additional benefits like GIP make a benefits package stand out at a time when all employers are now – or will soon have to – offering pensions through auto-enrolment.
“Our research shows employees who are offered GIP feel more valued and are more likely to stay within their organisation, making this a highly valuable retention tool.”
