Insurance
6 mins read

Do We Need Both Group Income Protection and Group Life Insurance?

When building an employee benefits package, HR managers often wonder whether to offer both Group Life Insurance and Group Income Protection. Here’s how to decide.

Yugi the Giraffe - 6 January 2025

Imagine you're building an employee benefits package that strikes the perfect balance between support, engagement, and cost-effectiveness. You want to ensure your team feels valued and protected without overextending your company’s budget. As you navigate the numerous options available, you may find yourself asking:

Do we really need both Group Income Protection and Group Life Insurance?

It's a valid question, especially when considering which benefits offer the greatest value to your employees. Below, we’ll dive into what each of these types of cover provides, why they’re important, and whether including both Group Income Protection and Group Life Insurance in your benefits package truly adds value.

Understanding Group Life Insurance

Group Life Insurance is a benefit offered to employees that pays out a lump sum to their beneficiaries if they pass away while employed by the company. It’s a reassuring safety net, giving employees the peace of mind that their families will be financially supported if the worst happens.

For instance, YuLife’s Group Life Insurance provides a tax-free payment to employees' chosen beneficiaries, generally equivalent to a multiple of the employee's annual salary. This benefit — also known as Death in Service — can cover funeral expenses, help pay off mortgages, and ease the financial burden for the loved ones left behind.

When might employees need Group Life Insurance?

Employees with dependants are often those who most appreciate Group Life Insurance. It ensures that their families won’t face immediate financial difficulties, such as covering living expenses or repaying debts if they are no longer around to provide for them.

The death of a family member can also bring unexpected costs, and a group life policy can alleviate that financial stress, helping family members through the challenging time.

Understanding Group Income Protection?

Group Income Protection is a different type of cover designed to provide an ongoing income if an employee becomes unable to work due to illness or injury. Unlike Life Insurance, which pays after death, Group Income Protection keeps employees financially stable if they’re alive but unable to earn a salary.

YuLife’s Group Income Protection helps cover a portion of the employee's regular income if they are unable to work for an extended period, generally starting after a deferred period, such as three or six months of absence. This benefit is particularly valuable for employees who might otherwise struggle to cover rent, mortgage payments, or other essential living expenses during a prolonged period of ill health.

When might employees need Group Income Protection?

Think of an employee who has been diagnosed with a long-term illness, such as severe depression or a back injury that requires surgery and extensive recovery. During such a period, government Sick Leave or personal savings may not be enough to sustain their financial commitments. 

Group income protection offers ongoing financial support in these scenarios, allowing employees to focus on their recovery without the stress of financial instability.

Do You need to offer Group Income Protection and Group Life Insurance?

So, do you need both Group Income Protection and Group Life Insurance? The answer depends on the objectives of your employee benefits package, but offering both can provide more comprehensive coverage for a range of eventualities, delivering security and peace of mind for your employees.

The benefits of offering both types of cover

1. Coverage Across Different Needs

Life Insurance and Income Protection meet different needs. Group Life Insurance supports employees’ families after their death, whereas Group Income Protection helps employees themselves during life-altering illnesses or accidents. Offering both ensures employees are protected no matter what happens — providing comprehensive financial security.

2. Enhanced employee loyalty and engagement

Employees tend to value benefits that genuinely address their biggest concerns. Group life insurance has long been one of the most popular benefits, appreciated for the security it offers dependants. Providing both benefits demonstrates your commitment to employee wellbeing, which helps with attracting talent and boosting retention.

3. Mitigating the impact on the business

From a business perspective, both covers can also reduce the risk of financial pressures arising from long-term absences or the sudden loss of an employee. Income protection can help fund the cost of temporary staff if someone needs extended leave, while group life insurance can ease the financial transition if a key team member passes away unexpectedly.

When you might choose either Group Income Protection or Group Life Insurance

There may be situations where you need to prioritise one type of cover over the other due to budget constraints or specific workforce needs.

Prioritising Group Income Protection

Group Income Protection can be particularly appealing to younger employees who may not yet have dependents. This demographic often prioritises benefits that protect their own financial wellbeing, such as income replacement if they’re unable to work due to illness or injury. For younger workers, the prospect of maintaining their income during a health crisis may feel more immediately relevant than Life Insurance, which primarily benefits dependents.

Prioritising Group Life Insurance

Group Life Insurance, on the other hand, tends to resonate more with employees who are likely to have financial dependents, such as children or a spouse. For these employees, the assurance that their families will be financially supported in the event of their death is an important consideration. This benefit is also valued by employees with significant financial obligations, like mortgages, which could otherwise become a burden for their loved ones.

Balancing cost and coverage

It’s important to assess the needs of your workforce and balance them with what you can afford. Ultimately, choosing to offer both Group Life Insurance and Group Income Protection is about providing holistic support – protecting your employees, their families, and by extension, your business from the financial shock of unforeseen circumstances.

For HR managers and business leaders, the decision to offer both Group Life Insurance and Group Income Protection is about understanding and addressing the core needs of your workforce. Together, these benefits provide robust coverage for life’s uncertainties, supporting both employees and their families through challenging times. When viewed as part of a long-term investment in your team’s wellbeing, they play a crucial role in building a resilient, engaged, and loyal workforce.

About YuLife

YuLife 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.

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Yugi the Giraffe

Yugi is our YuLife mascot. Like all giraffes they've got a big heart – in fact the biggest heart of all land animals.