Group Life Insurance and Income Protection

Group Life and Salary Continuance (Income Protection) Insurance offers staff and other members of an organisation access to insurance that may well be otherwise unobtainable. With many Australian’s unable excluded from Life Insurance or Income Protection due to pre-existing medical conditions, group insurance can provide your staff or members invaluable protection. Group Salary Continuance cover can be negotiated and customised to fit the needs of your organisation. Leveraging economies of scale, you may well be able to secure a group insurance policy with terms and pricing that are more favourable than if an individual was looking to acquire an insurance product seperately.  With more emphasis being placed on employers efforts to retain and nurture their staff, there is no better way to show them that you care about their welfare and well-being than by offering them a group insurance plan.

Group Salary Continuance and Life Insurance products are inherently complicated and the guidance of a financial adviser can be invaluable to you and your members. Providing those that are insured with a point of contact to provide claims and administrative assistance will allow for your members to have peace of mind that they will be looked after.

Speak with an adviser to best determine the needs of your group and the products that will provide you and your organisation with the peace of mind you desire.

Types of Group Insurance

Typically, the main types of group insurance are: Group Life Insurance, Group Salary Continuance Insurance (Group Income Protection) and Group Total and Permanent Disability (TPD) Insurance.

  • Group Life Insurance will generally pay you a lump sum should the insured pass away or become terminally ill.
  • Group Income Protection Insurance and Group Salary Continuance Insurance will typically pay you up to 75% of your income should you be unable to work due to illness or injury.
  • Group TPD Insurance is generally offered with an Any Occupation definition, meaning that, in order to claim successfully, you would need to be unable to work, due to accident or illness, in any occupation for which you are suited to by training, education or experience.
FeaturesGroup InsuranceRetail Insurance
UnderwritingGroup Insurance typically provides members with guaranteed acceptance without underwriting. This can be incredibly valuable to members who have a complicated medical history. Retail insurance applications are subject to full underwriting, typically there is no automatic acceptance. This often results in those who have pre-existing conditions having to pay additional premiums to be insured.
PremiumsGroup Insurance policies are based on wholesale insurance rates, allowing employers to offer cut-price insurance. Companies and organisations are able to leverage their size when negotiating with insurers. Retail insurance policies, although cheaper than direct marketing products, are generally more expensive that group insurances. The reason for this is that each applicant has to be underwritten and individuals are unable to negotiate with insurers.
Level of cover General Insurance typically offers a fixed level of cover that is available to staff based on their age and income. Any cover that exceeds this fixed level could be subject to underwriting as well as higher premiums. Retail insurance policies are flexible in that they typically do not have a limit when it comes to applying for cover. The specifics of the policy are tailored to the individual and they don’t utilise a ‘one size fits all’ approach.
Quality of the product Group insurance policies are often quite basic in nature. For example, Group income protection policies often only have benefit periods that extend to 5 years. This could present a risk for the insured in the event of a long term claim. Retail insurance policies can be customised to provide a basic level of cover (similar to group insurance) or conversely they can be made to be very comprehensive. There are a number of extra benefits that are available through retail income protection policies that aren’t available through group insurance.
Ownership Structure Often, group insurance policies are very restrictive in terms of the ownership structures available to the insured. Many group insurance policies will only permit the life insured to be the policy owner, rendering this type of cover ineffective for many Australian’s. Retail insurance policies are flexible in terms of who can own the policy. Policy owners can include the insured, spouse of the insured, business partner of the insured or even the company that employs you. Many types of insurances require complex ownership structures which is why it is crucial to get advice when making these decisions.

Group Insurance Eligibility Criteria

The eligibility requirements vary from insurer to insurer with some accepting groups as small as 20 people whilst others require in excess of 100. Group insurance plans require extensive negotiations with the insurance company as a means of guaranteeing that you and your company receive the greatest value. Finding the group insurer that is best for your business or organisation is one of the main roles of an adviser and it is an area where relevant expertise can add tremendous value.

There are a number of insurance companies in Australia that offer Group Life Insurance and Group Salary Continuance (Income Protection),​ they include:

  1. MLC
  2. AIA
  3. TAL
  4. AMP

To see how you can offer your staff the ability to protect their lifestyle and loved ones, get in touch with us today!

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