One in 10 finance directors do not know what income protection is
Widespread misunderstanding about income protection (IP) among finance directors is holding back take up of the product, according to research by Unum.
A survey carried out by Financial Director magazine on behalf of Unum shows that one in 10 finance directors do not know what IP actually is.
Furthermore, 40% wrongly believe that the product pays out if employees are made redundant, and although a quarter said it was of direct benefit to their company, 74% did not provide it.
A fifth of those who did not provide it said the reason was a lack of awareness among management and HR, while a further 48% said it was too expensive to set up or maintain.
The poll of 850 financial directors and chief financial officers also revealed that respondents are failing to work with HR departments on benefits decisions.
Some 20% of financial directors say they do not liaise with HR over employee benefits, while a further 27% have limited interaction.
Furthermore, three quarters of financial directors say they have not reviewed their employee benefits in the last three years, while 37% say they only change their benefits to keep up with competitors and 68% plan to freeze or cut their benefits budget this year.
Peter O’Donnell, finance director at Unum, said while he understands the challenges financial directors face, companies should not forget that benefits can play in important role in saving firms money.
He said: “Income protection is one of the few employee benefits to provide a valuable saving for the employer if you do need to claim by getting people back to work more quickly and paying the employee and income so the employer doesn’t have to.
“This is no small consideration when one in 10 people go on long-term sick leave during their working lives.”