Employee benefits for contractors and employees vary greatly, even if they are working under the one organisation. Approximately 20% of employees have privately arranged Income Protection Insurance, and 50% of employees have sufficient levels of Life Cover for their dependents. Knowing that you and your family will be looked after should the worst happen is a valuable benefit and certainly not one that an informed contractor, employee or employer should give up easily.
The complete benefits package
Life cover, and other additional insurance benefits, can be provided on a group basis. Group life, and in particular group disability cover, could be a key element in properly valuing and retaining loyal employees. It can also free an employer from any implied moral duty that they may feel towards their employee should they be affected by death and/or disability when they already have a solution in situ.
Why would an employer provide Group Risk benefits for their employees?
- An employer can write off the full cost of providing the benefits against corporation tax.
- It is an attractive, and relatively cheap, benefit that the employer can offer current and future employees.
- The underwriting requirements for group risk assurance are much less stringent than for individual policies.
- Typically, based on the size of the group, a not insignificant level of the cover can be provided without medical evidence.
- The employee’s details only need to be provided at scheme setup, and again at renewal, this makes administration a lot simpler.
- As the cover is organised on a group basis, costs are significantly lower than equivalent individual policies.
- An employee must be able to meet an actively at work declaration, which for a new scheme usually means no absences of more than three consecutive days in the previous six months.
- Administration for the employer is much more straightforward than purchasing equivalent policies for each individual employee.
The full range of protection products available under a group risk package include:
- Death in Service (Life Cover) – This can be a multiple of salary or a fixed lump sum. In addition the payment can be made as a spouse’s pension or as a children’s pension.
- Income Protection – This pays a monthly income if an employee is unable to work for a prolonged period due to illness or injury – essentially protecting the employee from loss of income.
- Pension Contribution Protection – This ensures contributions continue to the employee’s pension plan, even if they are on long term sick leave.
- Group Serious Illness – This pays a lump sum if an employee is diagnosed as suffering from one of number of specified serious illnesses.
Does your employer look after you and your family? Or are you the contractor, if so, you are also the employer.
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