Why Employee Benefits WorkWritten on October 14, 2015 by Kirk Rice LLP
Financial Services QuestionsThe Question:
My small company does not provide life cover or other benefits, but we are introducing a pension scheme. Is it possible to provide other benefits at a reasonable cost for small groups? We have 17 employees and one has a history of medical conditions and pays 4 times what I do for similar life cover.
Kirk Rice LLP answers:
It is always possible to consider groups as small as 2 employees and there is a wide range of products. Employee benefits should support the business goals of an organisation by encouraging the behaviour and values that it needs in employees in order to be successful. Many employers also cite ‘moral’ reasons based on a desire to care for employees’ and family’s well-being as key goals. In doing so benefits can enhance employee engagement, assist recruitment, retention and motivation. In my meetings with business owners, these are two of the most common problems raised. As an employer, you may wish to consider putting in place a private medical plan. Employees cannot always get a prompt appointment with a Doctor for themselves or a child. Inevitably, this leads to time off work and possibly a prolonged return to fitness. If a severe illness is diagnosed very few employees have sufficient savings to cope with the loss of earnings and extra costs that may arise if they have to regularly attend hospital.
Death in Service provision through Employer sponsored products can give employees access to insured protection cover easily obtained up to a level of cover known as the Free Cover Limit without the need to provide medical details before cover is granted. Your employee therefore could obtain some life and critical illness cover but it may be insufficient to fully replace what they have or fully meet their needs. They could apply for more cover by completing an application process with the insurer and the additional costs could be borne by the employee if you are able to facilitate this. I recommend anyone considering cancelling a protection policy to be very careful and seek advice first as valuable benefits may be lost. In your case the employee would only have cover in your group scheme whilst they are on your payroll and therefore could be left without cover at some time in the future.
Group risk policies can provide money when an employee is off sick over the long term, a tax free cash sum if they are diagnosed with critical illnesses and cash for their beneficiaries on death. Other popular schemes, offer private health care which now includes a 24/7 GP who always answers the phone and access to a support network that helps them back to work. Many other features are offered by some of the leading providers and can be attractive to your employees and assist with employee engagement.
I recommend you seek advice about designing a scheme that suits you and your business.
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Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.
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