Employers overestimate income protection cost

Bosses surveyed as part of the company's Workplace Wellbeing survey insisted that GIP schemes cost 3.54 per cent of payroll, when typically the cost of a good GIP scheme is more likely to land at 1.5 per cent, according to the insurer.

Once informed of the benefits of a GIP scheme employees were also questioned on how much they thought it would cost with an estimate of 4.74 per cent of payroll – over three times what it could potentially cost.

The survey revealed that more than four in five (85 per cent) of employees would like their employer to provide a GIP scheme and less than one in ten (8 per cent) said their employer already provides it.

The research also uncovered that just 8 per cent of employees surveyed said their employer already provides GIP protection.

Martin Noone, managing director of L&G Workplace Health and Protection, said: “Our research highlights the common misconceptions around the cost of GIP 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. 

"GIP 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."

L&G’s research surveyed 2,000 full-time employees and 200 managing directors or human resources managers from a range of companies.

Elizabeth Fleming-Duffy, protection adviser at Christchurch-based Cherry Finance, said: “I really think this is a case of education and transparency. A lot of the leaders of larger firms may be aware of exactly how much GIP protection will cost them, but that doesn’t mean that that is necessarily so for companies that have a smaller workforce, and therefore do not have an active human resources department.

"It’s very much a case of education across the board on income protection, and I think that’s definitely key.”