The Opportunity in Group Risk
An Introduction to Unum
We are Unum (pronounced YOO-NUM) and we’re one of the UK’s leading financial
protection insurers and have been for over 40 years
We insure:
47 of the FTSE 100
1.6 million people in the UK
As at the end of 2013, we paid:
£320 million in claims
more than £6 million a week in benefits to our customers – providing
security and peace of mind to individuals and their families.
We have a financial strength rating, Standard and Poor rating of A- (Strong)
Disclaimer
The following presentation:
Has been designed for a Broker audience with knowledge of financial products and nothing from it
should not be used with customers or as a sole basis for making decisions on selling products
Uses examples to demonstrate products, but these are for illustration purposes only, for actual
customer illustrations please contact your group risk provider
Terms and conditions apply to all Unum products highlighted in this presentation and they may differ
from provider to provider and overtime
Unum is not authorised to give advice. The material contained in this presentation applies only to
Unum and its products. Whilst we have taken all reasonable steps to ensure that the information
within this presentation is accurate and up-to-date, we cannot accept liability for any error or
omissions.
Unum Limited is authorised by the Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority
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An Introduction to Group Risk – Learning Outcomes
By the end of this session:
You should be able to talk to your customers about Group Income Protection and
overcome many of the objections that employers may have about Group Risk
products.
This session will also give an insight into the opportunities of selling Group Risk
products on the back of Auto Enrolment as well as highlighting some of the
benefits of selling Group Risk from the adviser viewpoint.
What is Group Risk?
Group Risk is an umbrella term for three employer sponsored benefits:
• Group Life
• Critical Illness Cover
• Group Income Protection and Sick Pay Insurance
These products give employees access to preferential terms over and above
individual cover they could buy themselves:
• Cover is available where there are pre–existing conditions
• Little or no medical evidence required
• Reduced rates due to spread risk
UK lags behind other developed countries in Protection Index
Sources Demos (2011) Of mutual benefit
UK Group Risk Market – The Opportunity
19 million
full time employees
19 million
full time employees
Potential clients
8.5m
2m
Insured
Insured
Employee coverage for GIP
Employee coverage for GL
Sources:
DWP - Labour Force Survey, June 2014
Swiss Re Group Watch report, 2013
Where to focus
UK Private Sector income profileThe RDR effect
6.9%
State benefits may replace
lost income
Source: DWP (2014) Households Below Average Income
‘Squeezed middle’
• High dependency on
income
• High outgoings limited
savings
High Income, Savings and
investments
From Personal to Group
• Many high-net worth clients already taking advice will be company
owners or hold high level positions
• They have access to key decision makers within the company
• Their concerns are likely to include: -Competition in the talent market
-Business continuity
-Risk management
• You could be making the most of your current relationships to:
-Close the protection gap
-Bring greater value to your clients
-Improve return on client
-Improve client retention
AE – How Group Risk can help employers and complement the
pension scheme
For many businesses, Auto Enrolment (AE) changes their relationship with their
workforce. This provides the opportunity for employers to review their benefits
packages and strengthen their businesses in the process.
Pension Contribution Cover is the liability taken care of if an employee is unable to
work
Life Cover for dependants should their loved one not survive long enough to
secure a good pension
Income for employees to continue to fund their own contribution to their pension
when the worst happens and they cannot work
EAP/Legal services to support both employer and employee through difficult times
The need - Incapacity and death figures during working life
You are 3 times more likely to be off long term sick in your working life than die1
Each year, over 300,000 people fall out of work onto health-related state benefits – 11%
of the workforce2
119,000 working age people are diagnosed with cancer each year3
35% of 16-44 year olds and 39% of 45-64 year olds report having a long standing illness4
Sources:
1.ONS (2013) Business populations report; Swiss Re (2012) Group watch report
2.DWP (2011) Health at work – an independent review of sickness absence
3.Macmillan Cancer Support (2013) The rich picture on people of working age with
cancer
4.ONS (2012) Adult Health in Great Britain
Simply put, the best way for people to get Income Protection is
through their company
Self
Thru work
Affordability
Availability
?
Accessibility
?
Acumen

Still, there is an imbalance in employers’ current emphasis on
Group Life over Group Income Protection
Common Practice Life = 4 x salary
Future State Life = 2 x salary + IP
Life
•
•
Life coverage which is too rich (4x
life plus dependent)
No GIP coverage
•
Basic life coverage (1x - 2x salary)
•
Essential GIP coverage
•
More GIP solutions to meet all budgets
Incapacity is 3 times more likely than death during your working life1
1Source:
ONS 2009 (2007 data), Unum Analysis
GIP
Value of Income Protection –
Achieving balance with Group Income Protection
The Return on Investment for an employer comparing spend on Life only with the
same spend spread across Life and Income Protection
Benefits from Life and Income Protection
Life and Income Protection
Employee
Benefits from Life Only
Life Only
Employee
• Peace of mind
• Dependants provided for
Employer
• Recruit and Retain
• Peace of mind
• Dependants provided for
• Financial support when sick
• Return to work support
• EAP everyday support
Employer
• Recruit and retain
• Expert absence management
• Return to work expertise
• Rehab support
• Third party validation
• Certainty of cost
The myths
Group Income Protection
Mythbusters
Myth 1: Income Protection is for a few
Reality: It’s the single most important insurance one can get
Without your income, you can’t pay for your outgoings
Other insurance policies will soon lapse if you don’t have the
money to pay the premium
Myth 2: Employees don’t value it
Reality: You are 3x more likely to have a long-term illness than die
in your working life1
1Source:
ONS 2008
•
They don’t know about it - but
•
On average over the last 10 years, 2.6m have been off work >6
months and claiming benefit – 1 in 10 of the workforce
Mythbusters
Myth 3: It’s too expensive
Reality: CEBR research1 quantified an average return of 48p for
every £1 of Income Protection plus 28p/£1 corporation tax
GIP covers salary costs (up to 80%)
Return to work support reduces loss of productivity and temp costs
Frees up HR time and effort
Myth 4: The State will provide
Reality: People receive very little from the State
•
•
•
Typical: ~£5,200 per year2
Severely disabled: ~£11,000 per year3
Very rare cases: ~£34,000 per year3(severe work related disability,
poverty, many dependents, and the need for full time care)
Sources:
1. CEBR, 2014 The benefits to private sector employers from the adoption of Group Income Protection as an employee non-salary benefit
2. DWP, 2014 (Based on weekly rate of ESA) Tax and welfare benefits can change. Further info available from HMRC
3. http://www.entitledto.co.uk/benefits-calculator (2014)
Sick Pay Insurance
Sick Pay Insurance
Sick Pay Insurance bridges the protection gap
Sick Pay
Sick Pay
Insurance
Long-term
Protection
Kicks in within first 4 weeks of absence
Benefit payments range from 12 weeks to 52 weeks
Meaning that you can choose benefit payments to complement existing arrangements
20
Absence Rates
90%
80%
Number of
Employees:
70%
60%
1-49
50%
50-249
40%
250-999
1,000-4,999
30%
5,000+
20%
10%
0%
Up to 7 days
Source: CIPD Sickness Absence Report 2013
8 days to 4 weeks
4 weeks +
Sick Pay Insurance
Sick Pay Insurance covers the cost of short-term absence
• Supplements Statutory Sick Pay (payable up to 28 weeks)
• Replaces Occupational Sick Pay arrangements
• Consistent third party validation of absence
• Ensures Duty of Care obligations are met
• Easy, online absence tracking and submission
What do Sick Pay Insurance and
Group Income Protection offer
employees and employers?
Employer Hierarchy of Needs
How can GIP help?
Staff
morale
Health and
wellbeing
Recruitment and
retention
Risk management
Business continuity
Conversation starters
Questions you should ask employers:
• Tell me about the benefits you provide
• How do these benefits fit with your business needs?
• How do you keep up to date with the latest employment law requirements?
• What do you do if one of your employees goes off sick?
• How does this impact your business?
• What are the nature of the absence problems?
• What are the likely causes of the problems?
• What steps are likely to be most effective at addressing the problems?
• How do you prevent the problems from recurring?
• How would you feel about a solution to better balance benefits?
Tailored Cover for Differing Needs
Options for all budgets
80%
Classic
Percentage of Salary Paid
Paid to State Pension Age
80% of salary
65%
Capital option
5 year payment term
65% of salary
Lump sum to cover
settlement
50%
Sick Pay Insurance
1 day to 4 week deferred
period
50% of salary
Typical payment period 22
weeks
0%
Day 0
Wk 4
Wk26
Time since 1st Day of Absence
Terms and conditions apply. Cover depends on policy.
Yr 5
State
Pension
Age
Employee Assistance Programme
Employee Assistance
Programme
Employer
• HR and Manager Helpline
• Absence Management Support
• Legal Advice
• Creation of Employment Contracts
• Help with Duty of Care obligations
Employee
• Practical, Confidential Information
• Support for Work / Life Issues
• Face to Face Counselling Sessions
• Blended Cognitive Behaviour Therapy
• Support Guides and videos
What’s in it for employers? – reasons to buy
Financial benefits
For employer and
employee
Increased
productivity/
profitability
Support for
employer’s
Duty of Care
Legal documents
save £££’s
in legal costs
Financial
Protection
benefits for
employers
Free legal guidance
For employer
Return to work
planning and
management
Expert resource
to help manage and
reduce sickness
absence
Visible, valuable
employee benefits attract
and retain talent
What’s in it for you?
Examples of Group/Personal Income Protection
Personal Income Protection
Group Income Protection
45 year old business owner Small business – 10 people
Income £60K
Illustration based on Benefit of 50% of salary (tax free)
Cover to 68
26 weeks deferred period
Max Benefit
Total salary roll of £542,000
Benefit of 66.67% of salary (taxed through payroll) RPI 2.5% cap
Cover to 70
26 weeks deferred period
Max initial benefit up to £250k per year or Max initial benefit up to £350k per year or
up to 50% of gross earnings
up to 80% of employee’s gross earnings
Access to cover Requires full Medical Underwriting
Pension
No cover
Contributions
Can be covered up to lower of 1/3 of salary or £120k
Assistance
Programme Personal
included?
Typical annual
premium*
Free Cover Level (FCL) ** £70,000 benefit
(Once and Done >20 lives)
Personal and Business
including line manager, business legal and documentation services
£1118
£5594
Option 1 : 130% of Lautro, 3.25% renewal
12-20% level
Annual Commission Option 2 : 21% level*
£234.78*
£671 - £1119
* Illustrative costs will differ for companies with different demographics and benefits
** Guaranteed level of cover for all members without Medical Underwriting, benefits over FCL will be subject to medical underwriting
Terms and conditions apply
Group Income Protection Commission Table
•
•
Timeline
Premium*
Year 1
£10,000
Year 5
£10,824
Year 10
£11,950
Year 1
£100,000
Year 5
£108,243
Year 10
£119,509
Year 1
£500,000
Year 5
£541,216
Year 10
£597,546
Year 1
£1,000,000
Year 5
£1,082,432
Year 10
£1,195,092
Commission @
12%
Commission @
20%
£1,200
£1,299
£1,434
£12,000
£12,989
£14,341
£60,000
£64,946
£71,706
£120,000
£129,892
£143,411
£2,000
£2,165
£2,390
£20,000
£21,649
£23,902
£100,000
£108,243
£119,509
£200,000
£216,486
£239,018
Commission rates of 20% may mean an increase in the annual premium paid
*based on a 2% salary roll increase
What’s in it for you? – Reasons to sell
Helps defend
core business from
competitors
Additional income
through offering
additional services
Increase client
retention/loyalty
Further contact
with clients
Benefits to
working in the
Financial
Protection
market
Good fit with
core business
Develop a
broader holistic
offering
Help corporate
clients to cut costs
Lower cost of
sale by targeting
existing customers
Summary of Group Risk
Key facts to take away:
Group Risk comprises of 3 key products:
• Critical Illness
- Lump sum in event of certain critical illnesses
• Income Protection
- Proportion of salary after a deferred period
• Life Insurance
- Lump sum on death
• Group protection is easier and cheaper to quote for than personal protection due
the risk being spread thus reducing the requirement for medical underwriting
• Employers get a greater return on investment with income protection than life
cover
• Large potential market in the UK, especially for income protection
Handset question
Would you like us to contact you?
1. Yes please call me - I write group risk already
2. Yes please call me – I have business clients but don’t do group risk
3. Yes please call me – I would like to know more
4. No thanks
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Many thanks for your attention
If you require any assistance, please contact:
Paul.Constant@unum.co.uk