Attracting, retaining and cultivating the best “human capital” is a major key to business competitiveness.
With an increasnig focus on the competition for talent and the wellbeing of your people, the benefits that you provide outside of remuneration are coming to the fore. In particular:
With this in mind, employee benefits programs represent a major opportunity for organisations to establish a competitive advantage. The challenge for you is developing a program that fits within your financial boundaries, whilst at the same time providing a total benefit / compensation package attractive enough to help draw and retain high calibre employees and cultivate a productive workplace.
Also known as salary continuance, group income protection insurance provides your employees with continuity of income in the event that they are sick or injured and unable to work for a period of time.
THE BASICS
As the employer, you design a plan that suits your business and budget. The plan will provide your chosen group of employees (or all) with income protection insurance, on an automatic acceptance basis, according to the plan design. The employer owns the policy and pays the premium. The insurance forms part of your overall employee benefits offering.
BENEFIT DESIGN
You, in consultation with MCP Lawyers Life, select and design the structure and key features of your employee income protection plan. These include:
– Waiting period – the period of time an employee needs to be off work before the policy will start paying a benefit. This will commonly be between 30 or 90 days.
– Benefit period – the length of time the insurer will continue to pay a benefit. This can range from 1 year, through to ‘age 65’
– Other – Whether you provide the same combination of the features mentioned above to all employees or differ depending on seniority is also an option available in the benefit design process
AUTOMATIC ACCEPTANCE
Group insurance is provided on an automatic acceptance basis which means that depending on the nature of your business (number of employees, role types, age demographics) the insurer will provide automatic acceptance of your employees, up to a certain level. For example, they may say all employees are able to obtain up to $10,000pm income protection cover, without providing any medical evidence. All pre-existing injuries/illnesses up to this limit are generally covered and the smoking status of the employee is not factored in.
CHOICE OF INSURER
There are at least 7 insurers in the group insurance marketplace. Each have their own niche market so it is important that you use a broker who can help you select the most aligned insurer. The Legal profession is somewhat polarising between insurers. Some have had better claims experiences than others. Those that understand the different cultures that exist amongst different firms can be more savvy with their pricing / design. Certain firm specific cultures can lead to poorer claims experiences than others.
COST
Between 0.3 – 2% of payroll, depending on benefit design.
OUR ROLE
As a professional group insurance adviser our role is to help you through every step of the process, both initially and ongoing. This includes:
– Tender management and due diligence: getting you a policy that provides great value and tailored to your needs;
– Enrollment of your firm into the plan
– Assist you in promoting the benefits to employee through communication packs and information sessions
– Helping you ensure your staff are underwritten to their maximum available cover and guiding youthrough the claims process;
– Ongoing review of your plan to ensure it remains appropriate, relevant and competitive
What happens when one of your employees gets sick or injured and can’t work? Does the company continue to pay them after they have exhausted their sick leave? Do you terminate employment? Can you afford to pay them as well as their replacement? What is the process and cost of terminating the employment of an unwell employee?
The answers to the above questions are complex and difficult. A simple solution to remove this moral and financial dilemma is Income Protection Insurance.
Income protection insurance provides confidence to your employees. Confidence that if an illness or injury occur, financially they will be taken care of.
The 2019 Financial Employee Wellness Survey conducted by PwC found that 35% of employees report that issues with personal finances have been a distraction at work. Nearly half (49%) of those who are distracted by their finances at work say that they spend three hours or more at work each week thinking about or dealing with issues related to their personal finances.
Competition for the best people is strong. We have come to observe these benefits as being highly valued by employees. Considering the growing number of employers now offering these employee benefits as part of their employment package, they are more and more valued and to a certain extent become expected.
Some of the insurance companies that we work with.
Integrity’s newly launched Five+ Group Insurance offering is unique to market and provides a differnt group insurance option. It allows businesses with between 5 – 50 employees to offer significant insurance benefits (Income Protection and Life Insurance) to its employees easily and affordably. It’s key point of differentiation is that you can obtain cover where you have less than 15 employees (but more than 5). Other insurers generally have a minimum requirement of 15 employees. A quote can be generated by MCP Lawyers Life quickly and easily. If you are looking to provide a more comprehensive insurance package and/or you have more than 50 employees, this product will not be suitable.
1. Employee Benefits – It allows small businesses to provide employees with valuable and valued insurance benefits, as part of their employment.
2. Quality – The insurances provided as part of the plan provide employees with 80% replacement income in the event that they cannot work due to illness or injury. The business is paid 20% of the employees income to deal with rehiring costs and disruption. Employees are also provided with life insurance of $200,000.
3. Ease – Applying for this plan involves providing a list of your employees with some basic supporting information (age, wages), accepting the quote and your benefits are in place. Claims are managed online by your adviser and payments made direct to employees if chosen by the employer.
4. Cover for new (and old) conditions – whilst the cover is provided for new events only (events that happen after the plan commences), if an event of condition arises and you haven’t had treatment for this condition in the last 2 years (or 5 if cancer), this is considered a ‘new event’.
5. Risk Management – Sick and injured employees and their families will invariably look to their employer for support in these difficult times. By having an arrangement in place that means you don’t feel obliged to keep paying an unwell and non-working staff member, you are avoiding a potential cash flow drain.
6. Cost effective – depending on the nature of your employees work (blue or white collar) the typical cost will be between 0.5 – 1% of payroll.
