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Understanding protection insurance Employee benefits

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Your employer is required by law to offer a sick pay scheme

If you are employed, the most your employer has to pay you by law is Statutory Sick Pay (SSP) of £75.40 a week (during 2008-2009). However, many employers are more generous than this and will often pay sick-pay over and above SSP.

A typical employers' sick-pay scheme gives full pay for a set time (four weeks is fairly typical). Some employers go on paying at a lower rate, such as half pay, after the initial sick pay period ends. 

Once the sick leave period has ended, employers have a number of options. 

  • They can stop paying sick pay altogether so the employee goes on to state benefits
  • They can agree to extend the period of sick pay
  • Then can offer alternative work or early retirement
  • They can terminate the employee's contract.

Some employers go further than offering just a sick-pay scheme and have a Group Income Protection policy which starts to pay out when sick pay stops. So, typically, the employer might cover sick pay for, say the first eight weeks, and then the insurance policy kicks in if the employee is still unable to return to work after that time. 

A Group Income Protection policy is a valuable employee benefit. It provides the employee with income protection at the employer's cost, or for a very small cost (much lower than if you bought an individual policy direct). 

Make sure you know what you're entitled to from your employer and the state before you buy any extra protection insurance, otherwise you might end up over-insuring yourself.

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