Group income protection includes a free cover limit, within which medical underwriting is not required. If a scheme member needs a higher level of cover, the insurer may ask for additional medical information to help them decide if the individual can be accepted on standard terms, adds Ellis.
Individuals with health conditions not only have access to the insurance via group policies, but also to treatment and support, says Harper. He adds that “access” also extends to overcoming “individual apathy through automatic membership provided through the employer’s benefits”. After all, the employer not only organises the cover but also pays for it.
It has been reported in the past that certainty of claim, because the policy is medically underwritten at the time of purchase, represents an advantage of individual protection over group. However, this was not referenced by any of the experts we spoke with — quite the opposite in fact in terms of the notion that group does not afford claims certainty.
“I don’t agree with the unfair criticism levelled at group income protection providers when it comes to claims performance,” says Harper. “There are important factors misunderstood or ignored by those outside the group world. And, to a lesser degree, why individual income protection claims ratios aren’t higher, compared to life or critical illness cover.”
It is true that annual overall claims paid figures are higher for the individual income protection market than they are for group. But the difference is not huge.
“The overall industry average group income protection claims figure was 75.7 per cent paid last year, and retail income protection 84.4 per cent,” says Hamilton.
According to our experts, the absence of medical underwriting, in the main, on group income protection does not necessarily lead to non-disclosure — some commentators suggest this as a reason for claims being declined in the group world.
We referenced the free cover limit earlier and that it is only benefit above this that is medically underwritten — a requirement that might be waived anyway on larger group schemes, says Hamilton, adding: “As a consequence, non-disclosure isn’t really an issue for group arrangements, as the insurance underpins the commitment made by the employer.”
This is similar for group life. AIG Life head of group distribution Chris Morgan explains: “Although people don’t go through medical underwriting, we don’t typically see exclusions in group life, and these policies are normally held in discretionary trust. All that means is that employees and their families can be confident claims will be paid quickly and usually free of inheritance tax.”
