International Group Income Protection
Otherwise known as International Short Term Disability (STD) and International Long Term Disability (LTD), International Group Income Protection is a benefit growing in popularity with employers and employees alike, for the support it provides employees based in overseas offices and the peace of mind it provides to expatriate staff.
What is International Group Income Protection?
International Business Income Protection is provided in the International Employee Benefits market via a choice of two products;
- International short term disability provides financial security for employees who are unable to perform their work duties to due to an accident or illness. It will pay a monthly percentage of the employees salary to the employer, after a deferred period for up to two years
- International long term disability starts after 24 months from the illness for accident, or when the international short term disability comes to an end. The cover can be as long as the employer chooses, up to a maximum employee age of 65.
Both of these International Company Income Protection products are often used by businesses with staff in multiple locations who want to centralise and harmonise their international employee benefits, and for expatriate staff on assignment around the world.
How does International Group Income Protection Work?
Most insures do not have a list of conditions that need to be satisfied, solely that the employee is unable to perform the duties of their job.
You can decide how much of the salary you want to cover, usually up to a maximum of 80% with most insurers.
The business selects an initial deferred period, typically either 13 or 25 weeks (3 or 6 months) after which international short term disability would kick in to cover a chosen percentage of the employees salary each month. There are some requirements which you would also expect to see;
- The employee must have been actively at work when the event which led to being unable to work arose.
- The employee has been officially signed off as unable to work and has been unable to work for the entire deferred period.
- The employee is under the care of an accredited medical practitioner and is under the maximum age of 65.
- The employee is not in any other occupation or in receipt of other remuneration or profit
If the employee is declared fit to work to only part time initially then they would be allow to receive a partial payment to support this, generally for up to 3 months after which it is reviewed.
The international short term disability benefit would stop when either;
- The employee returns to work full time
- The employee reached he maximum age of the plan
- The employee passes away
- The 2 years cover expires
If an employee returns to work but then relapse then the payment will resume on the sale basis as before without any additional deferment period, providing that the return to work lasts less than 60 days and that the cause for the new disability is the same conditions which previously occurred.
For International long term disability the details of cover are very much the same as for short term disability. One key difference is the requirement that, after 2 years when long term disability kicks in that the employee needs to satisfy two key points;
- They are unable to perform their own /previous occupation
- That they are unable to perform any suited occupation, based on their education, skills and experience.
This means that if, after 2 years on international short term disability or being funded by he company directly, the employee is able to perform another role rather than their previous one, it would be expect that this would be taken, and the international long term disability insurance would not kick in.
Why do companies need International Group Income Protection
There are many reasons that businesses choose International Employee Income Protection as a benefit for their staff.
Employees regularly rate it as one of the most desired employee benefits due to the security it provides both them and their families. Since the COVID-19 pandemic, business income protection has been ranked in the top 3 most popular benefits for employees on numerous surveys, due to the increasing awareness of the need for financial security in the event of a long term illness or accident.
However, what is often missed is that International Business Income Protection is as much an employer benefit, as it is an employee one. Some of the reasons why employers rate it so highly are;
- The reassurance it provides that they won’t be left paying an employee’s wages for an extended period of time, or having to make the decision to stop payments, knowing the consequences it could have for that employee and their family
- The ability to be able to take decisive action to fill the role with a temporary member of staff without taking a significant financial hit.
- The high popularity of the benefit supporting talent acquisition and retainment.
- The ability to provide this benefit when offices, or expat employees, are working in locations which do not offer Business Income Protection locally, or to the same quality
- The ability to be able to harmonise and centralise their Business Income Protection offering for all their employees and expat staff globally. Benefitting from one central contract, one set of paper work, one renewal date, one set of invoicing and being dealt with in one language, this has provide a huge time saving in HR and reduce the need for local HR functions if combined with a wider international employee benefits strategy.
- The ability to help reassure expat employees and their family and meet their duty of care for employees being sent overseas on assignment, without having to source separate expatriate disability insurance.
What is the difference between International Group Income Protection and international short term or long term disability?
There is no difference it is just different terminology that is use.
In the International Employee Benefits market International Business Income Protection is just split into two products, international short term disability and international long term disability, but it does the same thing – provides financial security for employees and employers when a member of staff has an accident or illness and is unable to perform their job.
How much of your salary do you get on international short term disability / expat disability insurance?
As a business purchasing the insurance for your employees, you can choose how much of the salary you are looking to cover. This can range from 50% to 80% although 60 – 80% is more common.
The amount of salary that you cover impacts the premium that you pay.
How much of your salary do you get on international long term disability / expat disability insurance?
Again the employer sets this limit, generally between 50% and 80%. If short term disability is also in place, then the business will decide whether to maintain the same level of protection, or alter it.
What events qualify for International short term disability / International Business Income Protection?
There are no set qualifying events or a list of illnesses that need to be met for the insurance to kick in, solely that the employee has been declared unfit to perform the duties of their job, and that the minimum criteria for a claim as been met, as per the above points.
What events qualify for International long term disability / International Employee Income Protection?
As per the above answer for short term disability, there is no set qualifying event or list of illnesses to be met, however the minimum claim criteria will need to be satisfied, as outlined above.
What is the minimum time off for International short term disability / International Group Income Protection?
There is no minimum time off, however for a claim to start being paid, the employee would need to be unable to do their job for longer than the deferred period that has been set on the plan.
What is the minimum time off for international long term disability / Worldwide Business Income Protection?
International long term disability would only start after either 2 years, or the end of the international short term disability coverage, if it had been taken.
What is the maximum time International short term disability will be covered for?
International short term disability covers the employee or expatriate team member for up to two years after the chosen deferred period.
What is the maximum time International long term disability will be covered for?
International long term disability can provide a percentage of an employee, or expat employee, right up to the age of 65, should they be unable to return to work due to the illness or injury suffered.
Do your other benefits, like International Health Insurance, continue while on International short or long term disability?
Whether your other International Employee Benefits continue is down to the discretion of the employer, not the International Business Income Protection policy, which is only designed to cover your salary.
Most employers will still fund your other benefits for the short term, particularly if you are using benefits like International Health Insurance, or an International Employee Assistance Programme to aid your recovery.
In the long term, employers may reduce or stop funding these benefits if you are not actively employed and if it does not breach your employment contract.
In that event, you should consider taking any benefits you wish to retain as an individual, with the help of the salary you are receiving via the international long term disability insurance.
Most International Health Insurance providers will offer what is called a ‘continuation option’ to allow you to transfer from the company scheme to a personal scheme on a similar level of cover, or less, without any additional underwriting to maintain the coverage you received on the company scheme.
Can I apply for new jobs while on International short term disability / long term disability / Worldwide Company Income Protection?
Employees and expats can apply for new jobs while receiving International Business Income Protection, however should they accept an offer and start a new job it would affect them receiving their monthly pay outs.
The impact it would have would depend on the work, remuneration, whether they were receiving short or long term disability and the rules and processes of the particular insurer.
We would always advice taking advice and also speaking to the insurer paying your disability insurance before actively looking for a new job to ensure you are not left in a worse position.
Are the benefits paid from International Business Income Protection taxable?
Generally the answer to this is that, so long as this was an employer sponsored plan, benefits paid out under international short term and long term disability are not subject to income tax.
However, we would always advise that you take specialist tax advice because different countries can treat this differently and personal circumstances may also have an impact.
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