Should I take out income protection cover through my employer?

2 min Read Published: 14 Jun 2014

Reader Question: Should I take out income protection cover through my employer?

Should I take out income protection cover through my employer?Many employers offer income protection insurance to their staff either as a benefit or on a paid for basis. Here I explain the difference and the benefits of both types of cover.

Employer income protection cover

  • also known as Group income protection
  • offered by an employer as either a free benefit or on a paid for basis
  • often cheaper than personal income protection insurance due to the larger group being insured
  • benefit is paid to the employer and then passed on to the employee in full or in part
  • if you did not contribute to the cost of cover any benefit received will be taxable as earned income
  • if you paid the premiums yourself then any benefits received will be exempt from tax
  • cover will cease if you leave your employment
  • due to the group nature of the policy a health questionnaire is not normally completed
  • previous poor health is not normally an issue providing you are fit to work when you apply for the policy

Personal income protection cover

  • policy taken out by the individual with premiums paid monthly
  • may be more expensive than a group policy due to the individual assessment involved
  • benefit is paid direct to the individual insured
  • benefits paid under this type of policy are normally tax free
  • cover will continue if you change employer
  • a health questionnaire will have to be completed and any pre-existing conditions may be excluded
  • the individual can select the features of the policy that suit their needs best e.g. when payments start and how long they are paid for