Insurance
Employee Benefits – Insurance Backed Policies
Death in Service/ Group Life Insurance
Simple overview
The typical starting point for most employers as it’s also the cheapest to provide.
Has more value for those aged 30-35+ as more likely to have partners/family, less value to younger employees without dependents.
Majority of policies are arranged as a multiple of salary but you can just choose a set monetary amount. Employees can be categorised so that different multiples are paid, it’s very common to see Directors or Senior Managers get a higher level of cover. Most schemes are set up using just basic salary and we find this is never queried by employees but is it possible to incorporate allowances, bonuses and commission income, or use P60 earnings (please note, this is far more hassle for the employer).
3 – 4 times salary is the most common multiple, with 2 times or a lump sum of say £30k/£50k viewed as rather miserly, whereas a multiple of 5 times or greater is generous.
Our comment
We very rarely see an employee benefits package that doesn’t include this, it’s more becoming the norm. Employees tend to view it as ‘nice to have’ but on its own, is very unlikely to stop an employee leaving as it’s cheap to get cover individually.
Private Medical Insurance/Health Insurance
Simple overview
Valued by all employees, regardless of age.
Private Medical is a complex product with many different variations that influence the price. When providing quotations on this we will provide a low-cost, mid-level and high-end option to gain a better understanding of a firm’s budget, and which features they value most. It’s very easy to get a cheaper policy but it’s value to the employees is easily eroded with high excesses or by limiting the amount of outpatient treatment provided. It’s a balancing act for most employers so we run through the differences to help them make the informed decision.
Our comment
The current most valued benefit but you really do get what you pay for. Firms that accept they pay for Private Medical encourage claims and we’ll see HR emailing out regularly to employees as a quick reminder of the cover and specifically, some of the unique functions on the better plans. If you don’t engage your employees with the benefits then they won’t get the same value from a staff retention perspective.
Income Protection
Simple overview
Pays out a proportion of an employee’s salary if they are unable to work due to long-term illness or injury. Kicks in after sick pay stops and will pay out until the employee returns to work, they retire or pass away.
Heavily valued by employees, especially in smaller companies as traditionally has only been offered by bigger firms or certain industries. Very good with staff retention as whilst it’s becoming more common, is still relatively rare. However, the employer really does need to remind staff that they provide this, we frequently speak to clients who have no idea they have this cover in place until we ask them to check their benefits.
Good sick pay (paid by the firm) is essential with Income Protection as the better the sick pay the cheaper the insurance premiums will be as the polices have a waiting period, called a deferred period, before they pay out. A deferred period of 3 months/13 weeks is where policies start to become more affordable.
It’s possible to insure up to 80% of salary but this is rare to see, generous policies will provide 70 or 75% but we do arrange some for only 50% or 60%. Example; firm offers sick pay of 3 months full pay, followed by 3 months half pay, and then the Income Protection will take over with a 50% pay out.
Often provided with various wellbeing support services, for example; counselling, second medical opinion, online physiotherapy.
Our comment
The value to an employer is often completely overlooked; insurance companies are very skilled with rehabilitation and know that helping an employee back to work quickly is incredibly important, especially with mental health. Therefore, it’s important to start a claim quickly (3-4 weeks after being off sick) as the insurer can then provide assistance to help the employee and hopefully get them back to work. Might save the employer from needing to find a replacement.
Critical Illness Cover
Simple overview
Provides a lump sum pay out on diagnosis of a defined list of critical illnesses, for example; Cancer, Heart Attack and Stroke.
Very rare for smaller employers as this is an expensive cover to provide.
Employees place high value on this, especially as they get older as will often also look to take own cover but find the cost rather prohibitive.
Benefit is often chosen to be a set lump sum to limit the cost and whilst some employers will do a multiple of salary it is less common and will typically only be 1 or 2 times.
Providers have different levels of illnesses insured so it is possible to get a cheaper basic version or pay a premium for a far better policy. We are always happy to provide quotations for both and then highlight the differences.
Our comment
A great way for a firm to differentiate themselves as a generous employer who is keen to show how much they value their staff. Often more value in the better versions of the cover but once again, must remind staff that they provide this or it’s a costly exercise.
Dental Insurance
Simple overview
Always received well by employees, not many enjoy going to the dentist and with dental costs rising rapidly this can really ease the financial pain.
Important to note that this is a contribution towards dental fees, it does not cover the full cost of most treatments or routine appointments (which are often limited to two visits per policy year as with typical dental guidance).
Different levels of cover/contributions can be chosen by the employer, and then the employee gets to choose the dentist.
Often added onto a Private Medical policy but can be chosen as a standalone policy. Please note that many Cash Plans will also provide a cash-back payment towards dental fees but this is usually far lower than with a full dental plan.
Our comment
People are finding it increasingly difficult to find NHS dentists so having a contribution towards going private can make the difference of meaning people actually look after their oral health. Not the most common benefit in smaller firms so a good differentiator for an employer looking to attract staff.
Cash Plans
Simple overview
Provides a cash-back payment towards the cost of numerous health benefits and treatments.
List of benefits/treatments typically includes a contribution towards; dental costs, optical tests/glasses, consultations/diagnostic tests or scans, and therapies likes physiotherapy, osteopathy and chiropractic acupuncture.
Some policies can also provide a payment towards the cost of a Private Medical excess.
Typically, always come with an Employee Assistance Programme (see below).
In our experience tends not to be as valued as the above benefits by employees but can be a good starting point if the employer is limited in budget. Younger aged (18-25) employees seem to place higher value on it.
Relatively cheap to set up in comparison to other benefits.
Our comment
Far more limited in value than Private Medical and really is not a substitute policy. Unfortunately many firms seem to arrange it as a token thought, leave it to the employees to read the summary of cover and just don’t seem to engage with their staff enough to encourage how they can claim meaning reduced value to the firm.
Employee Assistance Programmes (EAP)
Simple overview
A wellbeing and support service for employees (and their families), a lot of the features are delivered through an App or Online, 24/7 and 365 days a year.
Features vary between suppliers and often include; confidential counselling helplines and guidance, formal structured counselling, legal advice, medical helplines, virtual GP services, online physiotherapy, along with discounts and offers (not always health related but mainly so).
Will often come as standard with either Private Medical (or can have a large element of overlap) or with Income Protection.
Many private providers are also actively pushing EAPs with each generally reporting why their mental health support is the best. These are usually of more benefit if a firm is looking for very low cost benefits and are often offered with Cash Plans.
Our comment
Provide the core, and typically far more valued benefits, and Employee Assistance Programmes will usually be automatically provided, sometimes with more than one provider so firms often choose which to highlight to staff. Some employees will actively engage but frequently firms fail to highlight this benefit to their staff.
