Innovation from insurers in the design of income protection products could fill the gap where employees are left out of pocket while benefitting from new bereavement leave rights.
Last month, government unveiled its Employment Rights Bill which strengthened statutory sick pay (SSP) and made flexible working the default where practical.
But the Bill also establishes a new right to bereavement leave.
Leave does not extend to pay
However, employment lawyer, Melanie Stancliffe, partner at Cripps Pemberton Greenish, pointed out that the right does not extend to paying workers on leave.
“The extension of bereavement leave won’t require an employer to pay the employee during their time off,” Stancliffe explained.
“This will become law in the future, so currently the right to bereavement leave is limited to an employee who loses a ‘dependant’.
“There are limited exceptions which give a right to pay, such as where the death occurs during a period of paid family leave – such as maternity leave in the event of a still birth.
“It would be rare for an income protection scheme to cover bereavement leave.
“Many schemes have a waiting period of 26 weeks before any benefit is payable so that would not be satisfied.”
Nice touch
But that pay gap could be filled by innovative insurers offering income protection cover, according to Alan Knowles, co-managing director at Cura Financial Services (pictured).
“It would be a really nice touch for an insurance company to put something on the policy that says if you lose an immediate family member – a spouse or a child for example – that they would pay even two weeks of income or a month’s worth of income if your employer’s not paying you,” Knowles told Health & Protection.
“Something like that would be a really nice add to have.”
Risk of anti-selective policies
But Knowles conceded that from an insurer’s point of view such a policy could be anti-selective.
“So you could end up with someone who has got a loved one who is terminally ill for example and then they go and buy an income protection policy knowing they have a month off work to have some time and claim on it and cancel it,” Knowles explained.
“At the same time though, it seems there is something that we could and should do then.
“Of course that might push the policy prices up.”
Lessons from ASU products
Knowles added lessons could be learned from other types of cover.
“You’ve got your ASU products out there, accident, sickness and unemployment policies, they typically include carer’s benefit. If you have to stop work to care for a loved one, then you can claim 12 months of worth of income,” Knowles continued.
“This isn’t that far different from that. You’ve lost someone rather than stopping work to care for somebody.”