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Income Protection for All: Demand is there. How will you take advantage?

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In 2011, Unum began a multi-year, multi-million pound campaign to grow the Group Income Protection market by educating employees about the value of IP at work. 2012 is the time to realise that potential.

Alot can change in 12 months. After 2011, neither Middle East politics nor the Eurozone will ever be the same. And nor should the Income Protection market. Not one but two insurers promoting IP on prime-time TV changed the game for the industry. But for that new demand to be realised, insurers and advisers alike need to take concerted action in 2012. The time is right to make Income Protection a core part of employee benefit packages, and get the UK’s workforce a back-up plan.

For us this is just the beginning. Creating understanding of, and demand for Income Protection amongst employees, and getting them to ask about it at work is not easy. Changing perceptions won’t happen overnight. When we started in 2011, we committed to a long-term programme to grow the GIP market. We hope to take as many of you with us on this journey as possible. Through 2012 we’ll build on this platform, ensuring that both employers and employees understand the need to have a back-up plan.

The opportunity is already growing. We’ve doubled the number of employees willing to ask their employer for IP, increased the proportion of employers intending to buy GIP at their next review, and 68%1 of companies that don’t offer IP currently, are considering introducing it.

Though the current economic environment is tough for everyone, this also creates upsides for advisers. As greater pressure is placed on every penny spent, payroll budgets need to work harder. This provides the ideal chance to provide insightful and imaginative consultancy for your clients, and add value by helping them create benefit packages that work better for their businesses.

Specifically, there’s a strong case for overhauling outdated benefits packages. Beyond rate or feature tweaks, many companies have not truly reviewed their employee benefits for years. They find themselves with packages that are fragmented, and that have no coherent strategy - stuck with sets of legacy benefits that reflect only the needs of yesterday’s workforce.

By objectively assessing the real needs of your clients’ employees, and then matching the right benefits and benefit levels, you can help your clients create a better-balanced benefits programme that contributes to an engaged, motivated and healthy workforce. Though recent research from industry body GRiD shows 41% of employers envisage upping the value of their benefits packages in 2012, rebalancing benefits need not mean spending more - which helps address the Finance Director’s agenda as well. For example, we’re generally over-insured for Life cover but with no IP. Reducing Life spend to help fund a base level of IP would rebalance those benefits to meet today’s needs, at little extra cost.

And needs truly have changed for UK workers over the last 30 years. New graduates are carrying debt they never had. 60% of us are now in families where both partners work, with far more working mothers too. With the reality of the virtual office, demands for homeand flexible-working have risen. Employees are increasingly working into their 60s and beyond, to secure their retirements.

But above all, people are living longer: diseases like cancer that often killed, now have much higher survival rates. More employees than ever are able to return to work, and play an active role in the labour market; more of us also have to manage through recovery, or live with the impacts of serious illness. We’re now 3 times more likely to be unable to work for 6 months or more due to illness or injury, than to die during our working lives. It’s this health shift that’s made Income Protection a far more needed benefit for all staff.

In this environment, extending Income Protection to more staff makes sound business sense for both companies and their employees. For employers it insures against the direct costs of long-term sickness absence, and offers effective rehabilitation and return-to-work programmes. But beyond that, having IP in place makes sure that sickness absence policies are formalised and non-discretionary. This is an important way to avoid discrimination lawsuits. For employees, of course, it provides security and peace of mind.

With our recent introduction of foundation Income Protection, starting at around £200 per employee, provision of IP to all staff is more affordable than ever. As part of a reallocation of existing benefits spend, in the form outlined above, it’s possible to provide cover of greater value and relevance to more staff, for the same money.

The game is changing. At a time when employers can’t offer substantial pay rises, employee benefits become more valuable. The opportunity is there to grow the market - enhancing your business as well as proving your value to your clients. Let’s not let the chance slip away.

Jack McGarry

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