Unum’s new plan provides a foundation level of income protection cover and also fits in well with its TV advertising campaign that promotes IP as a back-up plan.
The plan is a variant on Unum’s existing Classic GIP and is aimed at employers who either have not been able to consider GIP for their workforce due to cost or who have GIP, but only for the top tier of their workforce.
The maximum benefit is 60% replacement income with no offset for State benefits. Benefit can run to retirement rather than having a limited payment term (typically such plans pay out for 2-5 years only). This is because Unum says 30-35% of its IP claimants cannot perform any suited activity and will never return to work. It adds though that exposure to its rehabilitation programme will ensure that the majority of claimants can return to their own occupation within two years.
Policy Terminal Age is 65 or to State pension age. The plan uses Unum’s “Definition B” – the plan pays out for up to 24 months where the employee is unable to perform their current occupation. After 24 months, a suitable and gainful occupation definition applies. In effect, the industry Blue Riband standard of “own occupation” applies for the first two years. After two years, if the claimant cannot return to their old job, they will be expected to take up a suitable job but if they still cannot work, the plan then goes on paying out.
Foundation Cover also includes an option where Unum can pay the benefit to the employee direct rather than to the employer if a return to work is not possible. This allows both parties to move forward once duty of care obligations have been met.
Unum’s vocational rehabilitation service is included on all GIP plans to help employees back to work, as is the Unum LifeWorks 24/7 employee and employer assistance programme.
What They Say
Head of products Tom Dupuis said: "Employers tell us that cost is often a barrier to offering IP to all staff, so we've developed a low-cost option, which is still tax deductible. Budget-conscious employers can now cover their entire workforce, allowing employees to protect their essential outgoings and have access to professionals and financial assistance to facilitate a return to work."
What We Say
"All budget plans are a compromise between wanting to limit costs and wanting to maximise benefits. This plan is quite a neat solution because it offers the much of the cost advantage of limited benefit term GIP but still goes on paying out to employees who have serious long term work/health issues after the first two years of a claim."