Group Income Protection Insurance for UK and Irish Employers
When an employee can't work for months, statutory sick pay leaves them, and you, exposed. Group income protection replaces up to 75% of their salary, and funds rehabilitation support so they can recover. Kota helps you handle the setup, the admin, and the renewals in one place.
About
Group Income Protection
What is Group Income Protection?
Since your team is covered as a group, there's no individual medical underwriting required for standard cases, making it far more accessible than individual policies.
Group income protection insurance covers:
-> 50–75% of gross salary, with a deferred period of 13, 26, or 52 weeks.
-> Rehabilitation support and early intervention support to aid return-to-work
-> Phased return-to-work support, topping up pay if employees work part-time or in lower roles.
Group Income Protection
vs. Group Critical Illness
Group income protection kicks in when an employee can't work for an extended period due to any illness or injury, replacing a proportion of their salary for as long as the policy runs.
Group critical illness cover pays a one-off lump sum on diagnosis of a specific condition listed in the policy, such as cancer, heart attack, or stroke.
Many employers offer both as part of a broader protection package because the risks they cover are different, and so is the financial impact on your people.
Why offer Group Health Insurance?
Attract and retain the right people
- Differentiate your benefits offering from companies relying on statutory minimums
- Strengthen your employer brand among candidates who research company culture and benefits
- Build loyalty by showing your people you’re thinking about what happens when life doesn’t go to plan
Go beyond statutory sick pay
- Replaces 50–75% of your employees’ gross salary during extended absence
- Covers physical illness, mental health conditions, and injury
- Reduces the financial pressure and anxiety on your people, helping them focus on recovery
Reduce the cost of long-term absence
- Insurer-funded rehabilitation case managers work proactively from the start of an absence, not just after claim is approved
- Early intervention - often before the deferred period ends - improves return-to-work outcomes significantly
- Shorter absences mean lower cover costs, less disruption to your team, and less pressure on your remaining headcount
Tax-efficient for you and your employees
- Premiums are deductible against profits, reducing your corporate tax liability
- No P11D benefit-in-kind charge for employees in standard (non-salary sacrifice) arrangements
- Benefits paid during a claim are processed via PAYE and taxed as normal salary
How Group Income Protection works
Choose your cover level and deferred period
Many employers insure between 50% and 75% of an employee's gross salary. The deferred period - commonly 13, 26, or 52 weeks - determines when the policy starts paying out. Aligning it with the end of company sick pay ensures employees face no gap in income at the worst possible time.
Get quotes based on your workforce
Insurers price the policy based on your workforce: number of employees, average age, salary levels, industry, and the cover terms you've selected. A broker approaches multiple providers on your behalf and collects quotes for you to review. Group policies spread risk across your workforce.
Enrol employees and set eligibility
Employees are enrolled as a group, which means no individual medical underwriting for standard cases. You decide who's covered - all permanent staff, or a defined subset - and whether cover applies from day one or after a probationary period. Employees with pre-existing conditions may be assessed separately by the insurer.
Manage joiners and leavers
As your headcount changes, the policy needs to stay current. Add new employees and remove those who leave. For fast-growing companies, the manual admin burden here is significant. Getting it wrong means paying premiums for people no longer on your payroll or leaving new hires without cover.
Trigger claim after the deferred period
If an employee cannot work beyond the deferred period, you notify the insurer and open a claim. Once approved, the insurer pays a monthly benefit to you, and you process it through your payroll as normal.
Set up Group Income
Protection in minutes
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Who offers
Group Income Protection?
How much does
Group Income Protection cost?
Group income protection is priced as a percentage of your insured payroll. Most employers pay between 0.25% and 1.5% of gross payroll annually, though the exact figure depends on several factors specific to your workforce and the policy terms you choose. Most of the key cost drivers are within your control, which means you can design a policy that balances meaningful protection with a realistic budget.
Cost factors include:
How much salary you insure
If you opt for a policy that also covers your NI contributions and pension contributions, expect that to add around 0.1-0.2% to your group premium rates. But it offers significantly more complete protection for your people.
Your Deferred Period
Employers who have a generous company sick pay policy opt for a longer deferred period, passing on the short-term risk internally while transferring the long-tail liability to the insurer.
Your workforce age profile
An older average workforce carries a higher statistical likelihood of extended absence, which translates directly into higher premiums.
If you’re a tech or SaaS company with a younger workforce, this often works in your favour.
Your industry and occupational class
If your company is predominantly digital-first or technology-based, most of your people will sit in the lower-risk occupation classes, keeping your premiums competitive relative to industries with physical risk exposure.
Your payout term
Long-term cover offers more comprehensive protection but comes at a higher premium. Many companies often start with short-term cover and move to long-term as the business scales.
Example scenario
A tech company with 50 employees, an average salary of £45,000, all in office-based roles, with a 26-week deferred period and 66% salary replacement on a long-term policy would have a total insured payroll of approximately £2.25 million.
At a premium rate of 0.5–1.5%, that translates to an estimated annual cost of £11,250 to £33,750 - or roughly £225 to £675 per employee per year. Exact figures depend on the age profile of the specific workforce and the insurer selected. Always obtain multiple quotes.
Tax implications of
Group Income Protection
United Kingdom
Employer Treatment
Employee Treatment
P11D / BIK Notes
Ireland
Employer Treatment
Employee Treatment
Revenue / BIK Notes
What you need to set up
Group Income Protection
Most of the information you need is already sitting in your HRIS. It's the ongoing management of that data across providers, payroll, and your benefits platform where the admin tends to build up. Here's what to have ready before you start:
Employee data
Cover level decision
Deferred period
Eligibility rules
Payout term
Provider selection
How Kota handles
Group Income Protection
Managing group income protection manually means chasing quotes, reconciling spreadsheets, and hoping renewal doesn't arrive unannounced. As both FCA-licensed broker and HRIS-connected administration platform, Kota removes the manual work from initial setup through to renewal.
Compare
Set up
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Manage
Frequently asked questions
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Group income protection replaces between 50% and 75% of your employee's gross salary if they're unable to work due to illness or injury. The benefit is paid by the insurer to you and processed through your payroll as salary continuance. Your employees continue to receive income as normal, with tax deducted via PAYE.
Premiums don't create a benefit-in-kind charge for your employees, and are treated as an allowable business expense for you as the employer. When a claim is paid, benefits are processed through your payroll via PAYE and taxed as normal income. If you're considering a salary sacrifice structure, different rules apply and professional tax advice is recommended.
The deferred period is how long your employee must be continuously absent before the policy starts paying out, commonly 13, 26, or 52 weeks. The longer the deferred period, the lower the premium. Many employers align it with the point at which company sick pay ends to avoid any gap in the employee's income.
Yes. Most policies cover mental health conditions including stress, anxiety, depression, and burnout, which are among the most common reasons for long-term absence claims in the UK. If your team works in a high-pressure environment, as many tech and professional services companies do, this makes the policy as much a business priority as a welfare one.
Most insurers will underwrite group income protection from as few as three to five employees, making it accessible to businesses like yours, not just large corporations. If you have a smaller team, you may have fewer provider options, but competitive quotes are still available for most businesses in the 50–500 employee range.
Short-term policies pay out for a fixed period - typically two or five years - from the point a claim is approved. Long-term cover pays until your employee recovers, or until retirement age if they don't. Long-term cover is more comprehensive and carries a higher premium. Many employers start with short-term and move to long-term as headcount grows.
When an employee leaves, they should be removed from the policy promptly. Otherwise you'll continue paying for cover they're no longer entitled to. With Kota, this happens automatically via HRIS sync, so there's no risk of ex-employees quietly remaining on a live policy.
Modern benefits management starts here
Benefits you and your employees will love using
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