The Institute and Faculty of Actuaries (IFoA) has called for an auto-enrolment style scheme for group income protection (GIP) in its Green Paper response.
A flexible system of auto-enrolment could help to increase GIP coverage as take-up for income protection remains low owing to a lack of awareness of the benefits amongst both employees and employers, it said.
It is the latest organisation to release its response to the Department of Health (DH) and the Department for Work and Pensions' (DWP) Improving Lives: The Work Health and Disability Green Paper. This week Unum argued in favour of tax breaks for employers that provide group income protection and other incentives in its response to the paper.
The IFoA's consultation response also highlighted that increased coverage could reduce State expenditure on out-of-work benefits.
This would mean that State funding can be targeted to those most in need of additional support should their health stop them from working.
If people are going to use insurance it is important that there is better alignment between State benefits and insurance, otherwise people who save hard to contribute towards insurance could end up losing out, it added.
IFoA president Colin Wilson said: "The advantages of income protection products are clear - they provide an effective safety net against unexpected loss of earnings. We believe the Government should do more to increase the uptake of these schemes.
"This could range from communicating their advantages to employers and employees to instituting a pensions-style auto-enrolment scheme with the ability to opt-out, to expand coverage. This would allow a reduction in State benefits expenditure and the redeployment of these savings to those with the greatest need."
Our weekly heads-up for advisers
'Pleased Unbiased has clarified'
The chairman isn’t answering his email
Reforms not enough
An economic cocktail