My partner was recently diagnosed with Stage 4 lung cancer. His work has a 6 month sick pay policy which then moves to Group Income Protection at 50% base pay. They also have a generous Death in Service benefit. I can't figure out how the two interact. Once the Income Protection kicks in, is it usual for the DiS to use the 50% at a new base? Or does DiS disappear as a benefit? Thanks!
Hello
Thank you for your question. I’m sorry to hear about your partner’s diagnosis but glad that there are employee benefits which will help financially while he is away from work.
As you’ve said, a Group Income Protection is designed to provide some pay once a company’s sick pay arrangement comes to an end. The specific terms and conditions will depend on how the scheme was originally set up by the employer with the selected insurance company. This may mean that there is a time limit imposed, for example, benefits will continue to be paid, subject to supporting medical evidence, for, say, two or three years, or may continue up to someone’s expected retirement age. The employer should be able to clarify this for your partner.
Similarly, a Death in Service scheme’s Terms and Conditions may depend on how this was set up originally with the insurer or pension provider. In most cases, you will find that a Death in Service scheme will pay a multiple of a person’s usual salary, not on the reduced pay being received from an Income Protection policy. The sum paid in the event of death will usually be a multiple of that person’s salary, or a fixed amount. Again, the employer should be able to clarify this for you.
It’s really important to make sure there is an Expression of Wish or nomination form in place for a Death in Service scheme (and for any employer pension arrangements). This tells the trustees of the scheme where any death benefits should be paid if the employee dies. It may be worth your partner checking if he has sorted this out, and if so, that the nomination is up to date with his current wishes.
I hope this has answered your query but we’d be happy to discuss this further if needed. The Financial Guides are available on 0808 808 0000, Option 1, then 2, finally 1 again, Monday to Friday 8am to 6pm. We’re also available on webchat here - click ‘Chat to Us’ at the bottom right of the screen.
Kind regards.
Julia
Financial Guide
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