Although both individual and group income protection include a wide range of additional wellbeing services that encourage a preventative approach to health, the early intervention aspect (multi-specialty support when someone is absent due to illness or injury) on individual income protection is much less advanced that it is with group, notes Cavendish Ware associate director Roy McLoughlin.
“L&G brought early intervention into individual plans after I’d been suggesting for some time to insurers that it made sense to offer the same as they do on group, but it’s not standard on all individual protection policies,” he says.
Whether group or individual, the protection tends to be taken out through some form of “intermediary”. But because the audiences and needs are very different, the adviser markets also tend to be quite distinct. Recent analysis of Aviva’s portfolio identified that only 7 per cent of consultants at adviser companies selling group protection also sold individual protection.
There are numerous other differences between group and individual protection, including how the benefits are taxed and how they interact with universal credit, says Zurich head of market engagement Peter Hamilton. However, those two subjects would both make for CPD columns in their own right, so we will leave those for another time.
Why choose one over the other?
Clearly, individual and group protection are very different products with different purposes, so it is impossible to pinpoint the advantages of one over the other, says Ellis.
It therefore comes back to how they differ, to help match the best product to client need. To build on what has already been said in this column, we will focus here on accessibility, claims experience and portability.
Both individual and group policies afford flexibility, but in very different ways. As mentioned earlier, individual protection can be tailored to individual needs, whereas group protection is tailored to employer needs.
A number of experts we spoke with for the purposes of this article talked about the inclusive nature of group protection.
Hamilton says that because group insurance provides coverage for a group of people, this allows for simplified underwriting and lower premiums. “In many cases, the pooling of risk and simplified underwriting means that customers with a more complex medical history have access to insurance that might not otherwise be affordable or available with a personal plan — an obvious and very tangible advantage.”
Ellis expands on this: “It’s likely there will be lower levels of upfront administration with group protection, as medical evidence is unlikely to be required for each employee.”
