Legal & General will accommodate April’s National Insurance (NI) hikes in group income protection (GIP) policy schemes and premium calculations – meaning some schemes will see rate increases.
For new claims, the NI rates and thresholds that apply when an employee goes absent will apply throughout the claim. If the claim is already in payment, Legal & General will not increase the payment in line with NI rate and threshold changes.
The insurer confirmed that where a client has chosen to cover employer NI as part of their group income protection, the policy will automatically track the increased NI rate from 6 April 2022.
The cover will also include the new Health and Social Care Levy from 6 April 2023, for all new and existing clients.
However, schemes still within the guaranteed rate period will not have their premium rate affected.
“Any policies that reach the end of the rate guarantee period on or after the 6 April 2022 will be reviewed and premiums calculated using a variety of factors, the NI increase will contribute within these factors,” the insurer told Health & Protection.
“However, if L&G has agreed to calculate premiums using a benefit based unit rate or premium rates, the premium will increase at the next account renewal to reflect the small increase in cover.”
For employers, this will be collected through the following changes:
- From 6 April 2022 NI rates will increase. Employers will pay an additional 1.25%.
- From 6 April 2023 the government will introduce a new Health and Social Care Levy and return NI contributions to the 2021 to 2022 tax year levels. The levy will share the same reliefs and thresholds as NI. Government will also start collecting levy payments for employees who no longer pay NI because they have reached their state pension age.
Colin Fitzgerald, distribution director at Legal & General Group Protection, (pictured) said:” While the impact on employees has been well documented since the government’s announcement of the change to NI contributions and the introduction of the Health and Social Care levy in 2023, the impact on employers arguably hasn’t.
“With this announcement, we hope to reassure our clients – current and future – and intermediary partners of our approach, in that the new levy will be automatically accounted for.”
In December Canada Life announced it was also increasing premiums for group income protection (GIP) schemes that have a rate review or go on risk from 6 April to cover the rise in NI.
