Why more employers should be thinking about group life insurance.
Group life insurance is one of the employee benefits most highly valued by employees, yet only 19% of SMEs provide the benefit.
Research by AIG carried out a while back (Life Group Protection research, 2018), showed that 20% of employees rate group life insurance in their top three employee benefits. However, whilst most large companies already provide group life insurance to their staff, only 19% of SMEs do so. This puts SMEs at a recruitment disadvantage, as employees moving from a larger employer are likely to lose this valued workplace benefit.
Employee benefits are a great way to attract and retain the best staff. Whilst not perhaps as immediately attractive as a company car or private medical insurance, group life insurance is up there as one of the most popular and valued benefits.
A group life insurance scheme is basically life insurance taken out by an employer on its employees as a group. It provides life assurance for your employees at a much lower cost than they can buy individually and there are free cover limits with no underwriting requirements.
A group life scheme is straightforward to set up and cost of the life cover is relatively cheap, making it an ideal starter employee benefit. Most employees are covered automatically, claim payments are tax free and they are usually simple to manage and administer.
For the employer, there are a range of benefits but in essence they boil down to a few key reasons – attracting and retaining the best talent, supporting your duty of care, providing reassurance for your employees and affordability.
In a competitive employment market, employers have to find ways to attract the best talent to their company and to retain them. Employee benefits are an excellent way to do this – and group life insurance provides valuable benefits to employees at a low cost to the employer.
With the increased focus on employee wellbeing, employers need to consider how they would deal with an employee death, and whether they feel an obligation to support the bereaved family. Small businesses often see the development of strong personal relationships and a bond between colleagues at all levels. With a group life insurance policy in place, employers are able to ensure the family are looked after and supported financially.
Furthermore, financial worries can be a concern and a cause of stress to employees and this can affect their focus at work. Research by MetLife, showed that one in three employees are distracted at work by financial concerns following death or disability (Health Insurance Daily, 2017). Group life insurance can help alleviate those financial concerns and help your employees focus on the job, thereby becoming more productive. They are also more likely to look favourably on their employer too for providing them with this security.
For employers, group life insurance is cheap. Premiums can also normally be deducted from a company’s corporation tax liabilities as they should meet the ‘wholly and exclusively’ rules. This means they’re paid for the purpose of the business and make up part of an employee’s remuneration package.
The per employee cost is also typically much lower than employees would pay if they bought it directly, so the perceived value to them is higher than the actual cost to the employer.
Group life insurance is also tax efficient. For employees, the cover is not treated as a P11D benefit, as premiums are paid by the employer. For the employer, the premium payments are treated as a business expense for corporation tax purposes.
As all companies are now required to set up a workplace pension, group life insurance provides the natural complement and a useful layer of additional financial security pre-retirement when pension savings are small.
So, group life insurance can make sense for SMEs on many levels. It’s cheap, simple to administer and in most cases, there’s no need for employees to answer medical questions.
To discuss how group life insurance can help your employees and your business, contact Kellands Corporate today.