Why you should consider a move into group protection

Paul Avis, sales and marketing director for Canada Life Group Insurance, explains the benefits of advising on RDR exempt products such as group risk.

The implementation of the Retail Distribution Review (RDR) is edging ever closer, yet one of the big questions is how it will affect the size of the intermediary market. As adviser charging rates become more transparent, speculation suggests some may be put off paying for financial advice they had previously thought to be free.

This 
in turn will put pressure on the IFA community to prove that advice is worth paying for, while at the same time making sure they are compliant with all of RDR’s stipulations and required qualifications. For some this may simply be too much – especially when coupled with current difficult trading conditions – and pundits predict a drop in IFA numbers.

However, whilst intermediaries are tweaking and perfecting their business models there are some RDR exempt products – including group risk – which can provide a much needed income boost.

Key to advising on protection products, and in this case group risk, is understanding their benefits for the end user – employers and their employees. In order to sell these products effectively advisers will need to be able to explain to employers why they should be interested in them.

Over the past year or so we have been in the grip of a tough economic climate, which shows no signs of abating anytime soon. A consequence of this is that many employers have found themselves unable to offer employees a pay rise (and indeed, may even have had to make cutbacks). However, group risk benefits start at around 0.25% of salary meaning they have the chance to boost staff morale 
at a relatively low cost.

Employee absence

Another side effect of the economic turmoil is that many workplaces have become more stressful environments for employees. Fear of unemployment, teamed with longer working hours and the need to compensate for a shrinking workforce, has led to almost half (47%) of employees admitting to feeling more stressed than last year.

This in turn has contributed to an increase in employee absence as people call in sick because they feel stressed, or the stress itself results in further health complications. Employee absence cost the economy £17bn last year, something employers cannot afford to see repeated.

Group risk offers a way to help employers minimise the costs of absenteeism by providing support for their employees. Group Income Protection (GIP) provides the widest range of added value services that will offer assistance in this way. Most providers offer an Employee Assistance Programme (EAP) which can help employees with everyday issues, such as relationship problems, advice on debt, health, well-being advice and stress.