Due to the COVID-19 pandemic impacting how businesses are able to operate, many employers have had to make the difficult decision to furlough staff. In consultation with the main insurers, we’ve set out below a summary of the impact on benefits payable. This is our understanding of how the majority of insurers are viewing claims in the current climate but for more clarity in relation to your specific group benefit products, please feel free to speak with your adviser.
Group Life Assurance
In the event that an employee is subject to reduced pay or has been furloughed, the insurer will normally continue to offer cover based on full pay, provided that a contract of employment remains in place and premiums continue to be paid based on their full amount of cover.
Group Income Protection
Temporarily, if an employee becomes incapacitated due to accident or sickness, the deferred period is met and the insurer is satisfied that earnings have been reduced due to COVID–19, the insurer will normally honour the definition of earnings on the scheme as prior to the reduction. This position will be honoured, providing premiums continue to be paid for the full insured benefits and a UK contract of employment is maintained. The insurer’s normal terms and conditions will still apply.
Volunteering
If an employee is volunteering for organisations such as the NHS, either during furlough or in their own time outside of contracted working hours, this ordinarily does not impact their Group Life or Group Income Protection benefits and the insurer will consider a valid claim.
Policy Specific Warnings
- Any claims as a result of the coronavirus will be payable, subject to the usual terms and conditions of the policy.
- If an employee is working from home, this falls under the standard ‘actively at work’ insurance regulation.
- Some group policies apply a catastrophic event limit or travel restriction, in respect of employees travelling for business against Foreign and Commonwealth Office advice, so check if these apply to your cover.