When times get tough, the value of employee benefits becomes crystal clear. Group Income Protection insurance is often at the heart of that safety net, giving your employees peace of mind by ensuring they’re covered if illness or injury leaves them unable to work. But there's one critical question that many employees often ask — one that HR teams and business leaders need to understand fully:Does Income Protection cover redundancy?The answer is, simply, no — Group Income Protection insurance doesn’t extend to cover redundancy. But this is more than just a technical distinction. Redundancy is a different kind of challenge, and the solutions for it need a different approach. In this blog, we’ll dig into why Income Protection falls short in these scenarios, and what employers can do to support their employees who may be facing the reality of job loss.Understanding Group Income Protection insuranceFirst, let’s make sure we’re all on the same page about what Group Income Protection is all about. Group Income Protection insurance is there to help replace a portion of an employee’s income if they’re unable to work due to health reasons. Typically, it covers between 50% and 80% of their salary, offering vital monthly payments until they’re well enough to return or until the policy reaches its benefits end date.Sometimes referred to as ‘sick pay’ or ‘Permanent Health Insurance’, Income Protection requires medical evidence to support claims, ensuring that the inability to work is genuinely due to health concerns. This coverage provides much-needed stability, helping employees focus on getting better without the constant worry about bills or financial pressures.To dive deeper into the ins and outs of Income Protection, you might want to check out our guides on debunking the common myths about Group Income Protection and Critical Illness Insurance vs. Group Income Protection.Why Income Protection does not cover redundancyThe key to understanding why Income Protection does not cover redundancy lies in its core purpose. Income Protection insurance is specifically designed to cover health-related absences from work. It addresses scenarios where an individual is unable to work due to physical or mental health challenges. Redundancy, on the other hand, is an employment status change — it’s not about an employee’s ability to work, but rather a business decision often linked to economic pressures.For employees who want to safeguard their financial wellbeing in case of redundancy, there are other forms of cover worth considering. Redundancy Insurance, for example, is available as a separate product that your employees can take out individually and may provide the support they’re looking for. While Income Protection is a fantastic benefit for health-related absences, redundancy is a different challenge that requires its own set of solutions.Alternatives for redundancy coverageSo, what options are there for redundancy coverage? Here are some alternatives you could consider offering to your employees or advise them to take out privately:Redundancy Insurance: Sometimes known as unemployment insurance, this type of policy offers financial support if an employee loses their job due to redundancy. Typically, this cover provides monthly payments for a fixed period — often up to 12 months — to help bridge the gap while an employee finds new work.Mortgage Payment Protection Insurance (MPPI): While not specifically designed for redundancy, MPPI can help cover mortgage payments if someone becomes unemployed. It’s a way of ensuring that a major financial obligation doesn’t turn into an even bigger stressor during what’s already a difficult time.Key considerations for businesses and HR teamsFor HR managers and business leaders, understanding what Income Protection insurance can and can’t do is essential for designing a comprehensive employee benefits package. Employees need clarity — they want to know what their safety net looks like, especially in times of uncertainty.By differentiating between Income Protection and redundancy cover, you can make sure employees are aware of their options and avoid any misunderstandings. Redundancy insurance might not be a standard offering within most benefit packages, but it could be an option worth exploring for businesses looking to provide a more rounded safety net for their workforce. But typically this is cover that an employee would take out privately.Moreover, if an employer becomes insolvent, there are statutory payments and other forms of support that employees may be entitled to from the UK government, including redundancy pay.Knowing how to keep employees informed about these provisions is also a valuable way to show you’ve got their backs, even in challenging times.Supporting employees beyond Income ProtectionThe role of HR teams and business leaders in supporting employees extends far beyond selecting insurance policies. It’s about fostering a culture where individuals feel valued, where they know that in times of both health challenges and economic uncertainty, there’s a plan in place to support them. While income protection doesn’t cover redundancy, understanding the full landscape of available options can help you create a benefits package that genuinely supports your employees, whatever they’re facing.For more information, don’t miss our guide on whether Income Protection insurance is worth it for employers. Ensuring your benefits package is comprehensive and well-communicated can make all the difference in attracting and retaining top talent.Learn about what Group Income Protection covers, and how YuLife is partnering MetLife to pave the way for Income Protection that not only protects—but promotes healthy living that lowers your employees’ risk of long-term absence.About YuLifeYuLife is working to reimagine the insurance industry by protecting lives, rewarding living and inspiring life. We’re on a mission to transform traditional insurance into a life-enhancing experience each employee will value and use daily. How does it work?Our award-winning app uses behavioural science and game mechanics to reward your people for living well while offering protection in case of crisis. And with our top-rated employee assistance programme, your team gets access to mental, financial and social support, virtual GPs, nutritionists, life coaches and more to help them live their best lives.Because we believe that your employees should benefit from their insurance from day one — and that wellbeing should be accessible every day, for everyone.Request a demo for your team today.