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L&G group protection to cover NI hike and social care levy

L&G group protection to cover NI hike and social care levy

Legal & General has said its group protection product will cover the incoming hike in National Insurance for employers as well as the government’s new ‘health and social care levy’ for individuals.

From April 6 this year, National Insurance rates will be increased by 1.25 percentage points.

And from April 6, 2023, this will be replaced by a 1.25 per cent 'health and social care levy' to fund the government’s social care reforms, which is also levied on those not normally paying NI, such as people who have reached their state pension age.

L&G said its group protection policy will automatically track the increased National Insurance rate, and will also cover the new levy for new as well as existing clients.

“While the impact on employees has been well documented since the government’s announcement of the change to National Insurance contributions and the introduction of the health and social care levy in 2023, the impact on employers arguably hasn’t,” said Colin Fitzgerald, distribution director at Legal & General Group Protection.

“With this announcement, we hope to reassure our clients – current and future – and intermediary partners of our approach, in that the new levy will be automatically accounted for.”

Legal & General’s group protection policy is still within its rate guarantee period, which means its premium rate will not be affected by any of the tax changes.

For new claims, the National Insurance rates and thresholds which apply when an employee goes absent will apply throughout the claim. 

But if a claim is already being paid out, Legal & General will not apply any adjustments in line with the National Insurance rate and threshold changes.

Legal & General is not the first insurer to do this. Back in December, Canada Life clarified that if an employer’s National Insurance contributions are insured, its cover will include the higher rate and the new social care levy.

Like Legal & General, Canada Life said there would be no change to the unit rate for schemes within their rate guarantee period.

But it also said a “small number of schemes” priced on total benefit rather than total salary will see a premium increase “by a small amount”, and that single premium accounts due on or after April 6 “will have slightly increased premiums”.

The National Insurance rise will, according to the government, be spent on the NHS, health and social care, as will the new levy.

ruby.hinchliffe@ft.com