Coronavirus: how group risk protection benefits are providing financial support

Employers have a huge amount to work through right now, given the current COVID-19 pandemic. From technical support for transitioning to working from home to retaining staff under new circumstances, such as with reduced hours or on furloughed pay. A number of companies are also looking to completely adapt their proposition, such as manufacturing a different product to support the NHS supply chain.

There’s a huge extra burden for companies to manage without even thinking about the benefits package. But that’s exactly where employers can find some help for their people, and benefits that provide financial support to employees when the worst happens really come into their own at times like these.

Group risk benefits are designed to provide financial support for staff at the worst of times – when they’re absent through ill-health, when they’re diagnosed with a critical illness or for their dependants if they die. It’s easy to overlook the value of such benefits during normal times, but many employers are now looking at these schemes to understand how to utilise them to support their staff, to understand how their insurance is affected by coronavirus, and to look at introducing them for the first time.

The financial benefits that are paid out to employees from such schemes are based on a number of key areas, including contracts of employment and salary. And employers will be working with their advisers and providers to ensure they fully understand the detail of the benefits they have, so they can make full use of them if needed, and ensure they’re getting all the support available.

Some key areas for consideration for group risk policies are highlighted below but it should be stressed that this guidance is couched in general terms and it’s important for employers to work together with their advisers to understand their own provider’s exact stance.

Is Covid-19 covered?

The majority of people who have COVID-19 are expected to recover but, sadly, some won’t survive. There are generally no exclusions under group risk policies, so death benefits under a group life policy should be paid. However, there may be a restriction in place for travelling against Foreign Office advice and a catastrophe limit may apply in the event of multiple deaths (see below).

For a group income protection claim to be valid, it must meet the terms of the policy, which includes the member meeting the definition of incapacity and having been unable to work due to illness or injury for the whole of the deferred period (usually six months).

We don’t yet know enough about the virus to understand whether people will be left with lasting complications or residual damage, but if that transpires to be the case, employees who are unable to work past the deferred period and who meet the definition of disability under the policy should meet the criteria for a valid group income protection claim. However, current logic suggests that most people who have had the virus will have fully recovered before the end of the deferred period that applies under the policy.

Coronavirus is not a specifically covered condition under a group critical illness policy but again, if the virus were to cause a complication that is a defined condition under the policy, such as kidney failure, liver failure or heart failure for example, generally, that would be covered. For a group critical illness claim to be valid, it must meet the terms of the policy, including:

the definition for the condition outlined in the policy being satisfied; and
the pre-existing conditions exclusion not applying to the member.

Does a catastrophe event limit apply?

For a group life policy, the catastrophe clause is likely to be invoked by this pandemic as it would be considered as one originating cause. This means that no more than a specified amount in total will be paid out for deaths attributable to the Coronavirus.

However, as the catastrophe limit is usually a significant amount, for example £100 million per policy, it is very unlikely that the limit would be reached. Employers should check their own specific event limit, and whether it will be applied, with their adviser.

Catastrophe event limits do not apply to group income protection or critical illness policies.

How does self-isolation impact on any Actively at Work conditions?

Generally, an employee who is self-isolating or being quarantined, but otherwise fit to work would be regarded as meeting any actively at work requirement.

For clarity, an employee who is self-isolating or being quarantined generally would not be considered actively at work if they have symptoms and have received medical advice to refrain from work.

What is the impact of furloughed pay or reduced hours?

Group risk providers are currently working through this, but we are seeing confirmations that cover can continue at full benefit entitlement rather than based on furloughed or reduced salary level. This is provided a contract of employment remains in place, data is provided based on full salary and premiums continue to be paid on that basis.

Making things as easy as possible

Group risk providers are working through many other issues in order to make things as easy as they can for employers. This includes considering how to gather the medical evidence required to assess group income protection and critical illness claims without putting undue pressure on the NHS, digital processing, electronic signatures and concessions around premiums (for example, allowing extra time for employers to pay if delays are caused by business interruption or illness).

Other help and support

In addition to financial support, many group risk products come with a range of embedded services, often at no extra charge, including fast-track access to support for stress and anxiety, healthcare apps and virtual GPs. These are currently getting very high levels of utilisation, further enhancing the value that businesses get from these benefits.

And finally

The group risk market is financially secure, models for pandemics and is able to function during the outbreak of COVID-19. It’s also incredibly flexible and accommodating so, with the help of their advisers, employers will find it possible to arrive at solutions that work for their business and circumstances. This will enable them to make the most of the group risk benefits they have in place, together with all the embedded help and support that comes with them. These are challenging times but by working together we can get through them.

The author is Katharine Moxham, spokesperson for Group Risk Development (GRiD).