When considering new employee benefits, one question that comes up frequently for HR leaders is: how much is Income Protection Insurance? Group Income Protection can be an invaluable offering, helping to support employee wellbeing by providing financial security if someone is unable to work for an extended period due to illness or injury. However, understanding the costs involved can be complex, as premiums vary significantly based on a range of factors. Let’s take a closer look at the costs of Income Protection Insurance for businesses and what to consider when providing this valuable benefit to your team.What is Group Income Protection Insurance?Group Income Protection Insurance is a highly valued employee benefit that pays your team a proportion of their salary if they’re unable to work for a prolonged period due to illness or injury. Unlike individual policies, Group Insurance coverage is purchased by the employer, meaning it provides collective coverage for the workforce, making it easier and more affordable to manage compared to individual plans. What’s more, offering this kind of benefit demonstrates a commitment to employee welfare, which can help build loyalty among your team and attract top talent when you’re recruiting new people.Factors affecting the cost of Group Income ProtectionTotal payroll and number of employees: The size of your workforce and the total payroll amount will directly impact the cost of the policy.Percentage of salary covered: Most policies cover between 50% to 75% of an employee's gross salary. At YuLife, you could receive cover up to 80% of your employees’ salaries. However, higher coverage percentages will result in higher premiums.Deferred period: The deferred period, or the amount of time before payments begin, is another important factor. A longer deferred period (e.g. 26 weeks) will reduce the cost compared to a shorter one (e.g. 13 weeks).Age and gender of your employees: As well as the number of employees, their average age can also significantly affect premiums. Younger workforces are generally less costly to cover, while larger teams can benefit from economies of scale.Employee health and claims history: If the group has a history of multiple claims or is generally older with more health issues, the cost may be higher.Occupation risk level: The nature of your business also plays a role. Industries that have a higher likelihood of work-related injuries, such as construction or manufacturing, are more expensive to insure compared to lower-risk industries like professional services. This may lead to increased premiums.Policy terms: The length of the benefit payment period and the definition of incapacity used (e.g. "own occupation" vs "suited occupation") will affect the cost.The value proposition of Group Income ProtectionWhile the cost is an important consideration, it's crucial to weigh it against the benefits that Group Income Protection offers to both your business and your employees:Financial security for employees: Group Income Protection provides employees with financial support if they're unable to work due to illness or injury, offering much more than the statutory sick pay of £116.75 per week (as of April 2024).Talent attraction and retention: Offering this benefit can help your business attract and retain top talent by demonstrating a commitment to employee welfare.Support services: Many Group Income Protection policies come with additional support services such as Employee Assistance Programmes and Virtual GP services, which can help reduce absenteeism and promote employee wellbeing.Tax benefits: Under current UK tax laws, premiums for Group Income linknProtection policies usually qualify as an allowable business expense:raIncome Protection Insurance cost: typical rangesHow much should your business expect to pay for Group Income Protection Insurance? As we’ve explained, the cost can vary, but typically, premiums for group policies range from 0.5% to 1.5% of your total payroll. This means that for every £100,000 of payroll, you might pay between £500 and £1,500 annually for Group Income Protection Insurance.These figures, however, are general estimates. It’s essential to consult with an insurer or broker to get quotes specific to your company’s situation. Some insurance providers offer tools to help estimate the cost based on your company’s details, which can be a good starting point.To illustrate the range, consider the following example:A small tech company with 50 employees, mostly younger professionals in their 30s, might see annual premiums closer to 0.5% of the payroll.Conversely, a medium-sized construction company, with 100 employees, some in higher-risk roles, could face premiums closer to 1.5%.What is the value of Income Protection Insurance for employers?While it’s natural to focus on cost, it’s also important to consider the value that Income Protection Insurance brings to your business. Providing this benefit not only supports your employees during challenging times but also delivers a return for your organisation in terms of reduced absenteeism, increased loyalty, and higher productivity.A study by the Chartered Institute of Personnel and Development (CIPD) found that financial security is a key factor in improving employee wellbeing. By providing Income Protection, employers can help alleviate the financial stress employees may face during illness or recovery, contributing to a healthier and more resilient workforce overall.Offering Income Protection Insurance can also enhance your organisation's reputation as a caring employer. This can play a critical role in talent attraction and retention as, in today’s competitive job market, prospective employees are increasingly looking for companies that provide comprehensive benefits beyond just a salary. According to REBA (Reward and Employee Benefits Association), 78% of employees are more likely to stay with a company that cares about their financial wellbeing.Making Income Protection Insurance work for your businessWhen thinking about Income Protection Insurance costs, it’s helpful to work with a trusted broker or employee benefits consultant who can advise on structuring a policy that aligns with your company’s budget and needs. Group Income Protection is adaptable, meaning you can choose the level of coverage, deferred periods, and other options that work best for your workforce.The benefit is that these adjustments can help you find a balance between the cost and the level of support offered. For instance, opting for a longer deferred period will lower premiums while still providing substantial support for employees who may need it.How YuLife can helpAt YuLife, we offer Group Income Protection Insurance that not only helps your employees when they need it most but also actively encourages healthier lifestyle choices to prevent medical issues before they arise. Through our employee app, your team members are motivated to stay active and engaged, which helps improve overall wellbeing and can even reduce the likelihood of needing to make a claim.Our Group Income Protection offering is designed to be flexible and tailored to your business needs, whether you’re a small company or a larger enterprise. By focusing on preventative health and encouraging positive lifestyle habits, YuLife helps reduce risks and keeps your workforce happier and healthier.Determining how much Income Protection Insurance costs will always depend on the unique factors of your organisation. Factors like company size, industry risk, workforce demographics, and the level of cover you wish to offer all influence the premium. However, the value of offering this benefit—from enhancing employee wellbeing to attracting top talent—makes it a worthwhile investment for many businesses.If you’re interested in learning more about YuLife's Group Income Protection Insurance, please get in touch to see how we can help support the health and financial wellbeing of your team.