7 Reasons Why You Should Get Income Protection for Your Employees

Financial benefits are always popular with employees – after all, their job is usually their main source of income – but despite being much valued, group income protection seems to be low on the list of priorities for many businesses. Here, we look at seven reasons why offering income protection can benefit you and your people.

What is group income protection?

Group income protection, also known as sick pay, is a financial product that supports employees if they’re unable to work due to illness or injury.

How much income protection people need depends on their circumstances – how much income they have in the first place and how much of that they spend on essential, unavoidable expenses – but with group policies, employers choose a percentage of the original salary to be covered (YuLife offers up to 80%), which is paid monthly (similar to wages) after a specified period of time. Many employers choose six months, as this is when statutory sick pay ends in the UK, but other options are available.

Employers also need to choose the length of time that the benefit will be paid, which can be a specific number of years or all the way to the State Pension Age.

So what are the benefits of group income protection? Let’s explore.

1. Group income protection comes with a bunch of extra benefits

A Group Income Protection policy from YuLife gives employees access to an Employee Assistance Programme (EAP) and vocational rehabilitation. This not only gives your employees access to preventative health tools but also provides them with the support they need for a quicker return to work.

More and more insurance companies are adding additional health benefits into their group income protection offering. For example, if you purchase group income protection through YuLife, your employees also get the YuLife app, which supports their wellbeing every day, creating meaningful behavioural change.

Through the app, employees earn YuCoin, the wellbeing currency, for healthy activities such as walking and meditating. The YuCoin can be exchanged for air miles and gift cards, or to get discounts on fitness gear, apps and gadgets – treats that might prevent some illnesses from ever arising.

A common question is whether you need group income protection for a mortgage. The simple answer is no, but it can offer your employees a safety net if the worst happens.

2. Group income protection supports financial wellbeing

Companies realise that financial stability is a major factor in their employees’ health and wellbeing, and that they need to do as much as they can to support them in that area.

Loss of income for an extended period of time can be devastating financially and the state of the nation’s finances suggest people are more vulnerable than ever. According to the Office for National Statistics, in October 2024, 20% of adults in Britain said they had to borrow more money or use more credit than usual in the last month, compared to a year ago – and 24% of adults said they would not be able to afford an unexpected but necessary expense of £850.

Data from the Financial Conduct Authority found that 14% of adults described keeping up with bills and credit commitments as a heavy burden in January 2024, and 11% had fallen behind or missed a payment in the previous six months. 

Your employees might not think that they need group income protection, but it can help to take some of that pressure off, and give them the reassurance that they’ll still be getting a steady income to pay rent or mortgages and support their families.

3. Group income protection helps attract and retain the best talent

Because loss of income is such a major concern for people, knowing that you offer this benefit is a huge deal for many employees and prospective. But that’s not the only reason why group income protection, specifically, can help with recruitment.

Most corporates consider group income protection as a core benefit, which means that as a start-up or SME, if you want to attract talent away from the big firms, you need to offer the benefits that they are used to receiving, such as life insurance and income protection.

4. Group income protection can shorten sick leave

As part of a proactive approach to employee wellbeing, group income protection policies often come bundled with extra rehabilitation support services such as EAPs and GP access, enabling employees to easily speak with medical professionals, clinically trained mental health experts and qualified counsellors.

These professionals can determine the best course of treatment for illness and maintain regular contact to ensure that an employee is receiving the care they need. Every interaction has the potential to prevent a more serious illness, or better yet, eliminate the need for an absence in the first place.

We know that financial distress affects mental health and wellbeing, and that money worries drastically reduce recovery rates for common mental health conditions. Employees who are offered income protection by their employers get the peace of mind they need to make a speedy recovery.

5. Group income protection creates a culture of caring

Many employers nowadays treat their employees as family. This is particularly true when it comes to SMEs. You may well be asking whether you need to offer income protection, but we know that employees who feel appreciated and respected are more engaged and more productive. Employers realise that if their prized business is important to them, there’s no reason why they wouldn't also value the wellbeing and happiness of their employees.

Offering group income protection shows you can show your employees that this is a sentiment you take seriously. You don’t only care for them while they are sick, but you also care for them as people - even when they’re too sick to do their job. This creates a better culture in the office, increases loyalty, and improves engagement.

6. Group income protection is more cost-effective than an individual policy

It’s true – employees can take out their own income protection policies, but even if they knew this kind of policy existed, many wouldn’t know what to look for or how to choose the right one.

As a conscious employer, you can make sure your employees are getting the best policy for them through a well-respected insurance company or a broker. Not only will this reduce the stress people face when having to choose insurance, but group income protection is significantly cheaper than an individual policy.

7. Group income protection is easy to administer

Group income protection is one of the easiest types of insurance from an admin perspective. The premiums are usually tax-free, there are normally no medical questions or examinations for your employees, and data renewals are the only admin you need to keep up with. With YuLife, even data renewals are simple to deal with, as they’re all done online.

If you are looking to provide group income protection for your employees, YuLife is here to help.

Contact us to get a quote and learn more about how YuLife is working with hundreds of businesses to provide group risk benefits that engage, reward and protect their people.