The Government has announced plans to increase health and social care funding and on 6 April 2022 National Insurance Contributions (NICs) will increase by 1.25 percentage points.
On 6 April 2023 the NICs will revert to the current rate and a new Health & Social Care Levy of 1.25% will be introduced.
"By covering the increase in NICs and the levy announced by the government to pay for health and social care funding, we hope to provide reassurance and certainty to our group income protection clients who insure National Insurance Contributions, as the changes come into affect.” Jason Ellis, Sales Director, Aviva Group Protection
The Q&As below explain how we’ll address these changes in your clients’ Aviva Group Income Protection policies.
How will Group Income Protection policies be affected?
We’ll insure the NIC 1.25 percentage point increase that applies between 6 April 2022 and 5 April 2023.
From 6 April 2023 when the NICs revert to the current rate, we’ll insure the new Health & Social Care Levy.
This will apply automatically when NICs are insured, so neither you nor your clients will need to take any action.
What Group Income Protection Policies are impacted?
- Existing Group Income Protection policies, where the policy insures NICs, and;
- New Group Income Protection policies going on risk from 6 April 2022, where the policy insures NICs.
How will existing unit rated policies within their rate guarantee period be affected?
The unit rate will remain unchanged. Most of the Group Income Protection policies we insure use a unit rate based on total salary roll and there will be no change in premium for these policies.
Some of the Group Income Protection policies we insure use a unit rate based on total benefit. The premiums for these schemes will have a small increase as the increased NICs will result in a higher insured benefit. Any premium adjustments will be made at the end of the policy year.
What will happen with existing unit rated policies that are due a rate review on or after 6 April 2022?
The unit rate quoted at the next rate review will take into account the increased NICs or the new Health & Social Care Levy.
What will happen to new policies going on risk on or after 6 April 2022?
The unit rate quoted will take account of the increased NICs or the new Health & Social Care Levy.
Will single premium costed Group Income Protection policies be affected?
The rate table will remain unchanged until the next rate review. The premium for our single premium policies is expressed as a rate of benefit for each member. As the changes will increase each member’s benefit on which the price is based, there will be an increase in premium. Any premium adjustments will be made at the end of the policy year.
Will there be a change to claims already in payment before 6 April 2022?
No. We provide cover for the NICs calculated at the date of incapacity. As a result, there won’t be any change to the benefit payable for:
- Claims in payment
- Claims where the date of incapacity is before 6 April 2022.
What will happen if the date of incapacity occurs on or after 6 April 2022?
Where this occurs, the benefit will take account of the increased NICs or the new Health & Social Care Levy.
It takes Aviva to make sure you’re always fully informed
As always, we want to make sure you know exactly how we’ll support you and your clients as times change. If you have any questions, please get in touch with your usual Aviva contact or email us.