Category: Group income protection · Reviewed by Amy Price, Account Executive · Last reviewed 2026-06-10
The definitions section of a group income protection policy is the heart of the contract because it determines who is paid, what they are paid, when they start to be paid, and when payment stops. The principal definitions are the incapacity test (own / suited / any occupation), the earnings definition (basic salary vs total cash compensation vs P11D), the deferred period, the partial benefit / proportionate benefit clause, and the cessation triggers.
Category: Group income protection Also known as: Incapacity definitions, policy wording Related concepts: Own occupation group IP, Any occupation group IP, Suited occupation group IP, Group IP benefit ceasing
Group IP definitions vary materially between insurers. A definition that appears identical may produce different outcomes in practice — for example the precise phrasing of “material and substantial duties” of the occupation, or the treatment of part-time hours within the earnings definition. Buyers should compare definitions, not just headline benefit and premium.
The FCA Handbook (ICOBS 6) requires that the definitions be communicated clearly to scheme members in the scheme literature. The Consumer Duty (Principle 12) applies to retail customers but not to the corporate employer; nevertheless GRiD’s guidance is that insurers should communicate clearly to scheme members as if the Duty applied.
Key definitions to scrutinise: (i) incapacity — whether own occupation, suited or any, and whether the test changes during a long claim; (ii) earnings — whether basic salary, bonus or P11D earnings are included; (iii) deferred period — linking provisions for recurring absence; (iv) partial benefit — formula for benefit during phased return; (v) cessation — at the earlier of return, retirement, death, payment-term expiry, scheme cessation age.
An employee’s salary is £50,000 basic + £10,000 average bonus. Under a “basic salary only” earnings definition the benefit at 60% replacement is £30,000. Under a “P11D earnings including bonus” definition the benefit is £36,000. The difference of £6,000 a year over a multi-year claim is material.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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