(UK) Income Protection Settlement Offer

Omnable

I have been off work for some time through illness and have been receiving monthly income protection payments (protection health insurance) through a group policy my employer has with an insurance company.

Recently my employer has contacted me with a lump sum settlement offer made by the insurer. This would in effect be a full and final settlement of my insurance protection claim- thus also ending my employment with the company. I assume the insurer is concerned that I will remain off work for a long period of time- throughout which the monthly payments will continue. Thus a settlement now might benefit them.

My dilemma is whether to accept the lump sum offer, negotiate a higher lump sum (if this is an option) or continue with monthly payments under the protection scheme. However, I don't know my rights an employee on long term sick leave or whether the income protection scheme also protects my ongoing employment. I don't want to turn down a lump sum offer only to then have my employment terminated and be financially out of pocket.

So therefore I ask if anyone has had any experience of this situation and has any advice to offer?

dunstonh

I assume the insurer is concerned that I will remain off work for a long period of time- throughout which the monthly payments will continue. Thus a settlement now might benefit them.

Not really. Insurers tend to do this to close liabilities down. Its an actuarial decision based. They like to close liabilities off early if they can. It is possible that they lose out and you gain or vice versa but you wont know until many years into the future which is best.

However, I don't know my rights an employee on long term sick leave or whether the income protection scheme also protects my ongoing employment.

If you take the lump sum and find future employment then it doesnt matter. However, if you take the income and find future employment then it will matter.

The insurer and the employer are not linked. That is one of the advantages of insurance based income protection plans. Unlike employer paid ones.