Employee Benefits – Enhanced Products For Smaller Companies


By Matt Haswell - Associate Director of Employee Benefits at Smith & Williamson

Group risk is an umbrella term for sponsored employee benefits and includes products such as group life insurance, group income protection and critical illness cover.

The benefits of group risk can be valuable to employees as they provide financial protection for both them and their families, yet they are relatively inexpensive for employers compared with some other components of the typical benefits package. The main features of each type of group risk benefit are as follows:

• Group life cover is the most common employer sponsored benefit in the UK and is...


...believed to often represent the sole life insurance provision for low to middle income individuals.

• Group income protection enables an employer to provide a continuing income for employees if illness or injury prevents them from working for a prolonged period of time.

• Group critical illness cover pays a tax-free lump sum to an employee on the diagnosis of one of a defined list of serious conditions or on undergoing one of a defined list of surgical procedures.

These group products can often be provided by an employer at a considerably lower cost than plans arranged on an individual basis. Enrolling employees into such schemes is generally easy as group schemes often allow members to join, up to a given level of benefit, without having to provide any medical information. This given level of benefit, often referred to as “free cover limit”, is affected by a number of factors, including the number of employees joining the scheme.

Issues for smaller companies

For larger companies, the economies of scale bring the benefit of competitive premiums and higher free cover levels, such that most employees can be covered without having to provide medical information. However, smaller employers may find that the “free cover... continued on page two >


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