Employee Protection Benefits
Offering employee benefits that cover your employees for illness or injury or death are highly regarded by today's workforce.
Our award winning team are here to help you design your optimal benefits package balancing the needs of your business, its people and budget.
Here are some of the most popular Protection benefits. We've explained each one in detail, summarising how they work, typically what they cover and the benefits they can bring.
Group Life Assurance
Group Life Assurance is also widely known as ‘Death in Service’ benefit. Thankfully, for the vast majority of your employees, the overwhelming benefit is simply peace of mind. And with less than a third of adults in the UK having any form of life insurance, you’ll be offering a very valuable benefit.
However, should the worst happen, your employees can rest assured that their beneficiaries will (usually) receive a tax-free lump sum cushioning them from serious money worries.
Group Life Assurance works like this:
• You cover your employees for a multiple of their salary, usually between two and four times their gross salary
• The plan pays out a cash lump sum should they die while employed by your organisation
• Because you set it up as a trust structure, any claims can be paid to beneficiaries free from inheritance tax
- Often the cornerstone in building a good employee benefits package because of its affordability and widespread employee appreciation
- Death in Service’ is one of the most known about and easily understood staff benefits
- Highly valued by employees and their family members
- Most insurers now offer a bereavement service to support the surviving loved ones
- One of the most cost-effective employee benefits on the market
- Your premium payments are usually eligible for corporation tax relief
When someone’s unwell, the last thing they need is anxiety over financial security. It’s a prospect that can cause concern among healthy employees. While the reality can hamper recovery for employees who are absent long term. Life can be unpredictable and if the worst was to happen, Income Protection can help if you are unable to work long term. Although state benefits can help, they often only pay a small portion compared to an average salary.
Depending on your policy, Income Protection payments typically start after someone is absent from work for an initial deferred period (typically 3 or 6 months), these payments continue until your employee can return to work, reaches state pension age or the end of any maximum payment term selected by you.
By offering Group Income Protection you provide your employees:
- A replacement income if they can’t work for a long time because of illness or injury
- Simple to administer and cost-effective
- It’s regarded as a core component of any successful benefits package
- Premiums aren’t treated as a benefit in kind for your employees, and you can usually offset these against corporation tax
- Employees can continue to pay for their lifestyle and everyday essentials such as rent or mortgage payments, car payments, children's clothes or food
Group critical illness cover provides your employees with a (usually) tax-free cash lump sum if they are diagnosed with a specified serious illness or condition (subject to the policy terms and conditions).
For example, a heart attack, cancer, stroke, or multiple sclerosis. This can happen to anyone, at any age, often unexpectedly. Due to the sudden nature of these serious illnesses, it can cause stress on your employees and their family.
Policies aim to pay out a tax free lump sum within a month of the diagnosis for most conditions, so employees and their families receive help when they need it most.Your employee can use the money for any purpose including:
- Funding private treatment
- Adapting their home
- Taking sufficient time off to fully recover
Key person insurance
Key person insurance (KPI) is s type of life insurance that helps protect your business from the financial fallout caused by the unexpected death or serious illness of a key employee. Safeguarding your business should a key employee die or be diagnosed with a serious illness. KPI can offer invaluable financial support. Business owners choose to cover those with particular skills, expertise or responsibilities and whose loss to the business can damage the business financially. If you are the owner, founder or managing director, you’re likely to be a key person.
Key person insurance typically works like this:
In the event of a key person’s death or serious illness (when Critical illness cover is included), your business is the beneficiary, rather than your employee’s relatives. It is designed to provide funding for you to find a successor, meet business debt, or provide funding to help with lost profits or if it is unfeasible for your business to continue operating, provide the necessary funding for an orderly wind down.
The amount of cover is based on the key person’s earnings or their contribution to your profits. It is expressed as a multiple, typically starting at £250k and exceeding £10m in certain circumstances.
The insurance premium will also depend on the employee’s age and health – it will usually be higher for a person aged 60 than it would be for a person aged 40.
- It can safeguard your business against the loss of essential staff
- Combined with the benefit of group life assurance, KPI lets your employees know they are valued
- It provides you with a budget for a suitable successor. If this isn't possible and you can no longer run your business, you will have the funding required for closure