Employee Benefits

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Employee benefits are products and services given to employees of a business paid for by the employer.

An employee benefits package can encompass a range of perks including a pension, as well as insurance products such as:

Most Group Insurance products provide cover for a collection of individuals under a single policy. This allows employers to give their workers valuable cover in an efficient and cost-effective manner that’s easy to manage.

Employers can choose how much cover to give their employees and with some products even have the option to extend cover to employees’ families.

There are a vast array of employee benefit options to consider each having their own impact on the cost and level of cover provided.

Why Should I Offer My Staff Employee Benefits?

Offering perks such as insurances to your workforce has a number of benefits, including:

  • Boosting workplace morale
  • Reducing both presenteeism and absenteeism
  • Improving productivity
  • Boosting the physical and mental health of the workforce overall
  • Distinguishing yourself as an attractive place to work compared to your competitors
  • Attracting new talent to the business
  • Retaining existing staff in what’s become a highly-competitive jobs marketplace.

The way employee benefits introduce these positives into a business is through a combination of workers simply knowing the benefits are there should they require them and, of course, using benefits such as Private Health Insurance and Income Protection at moments of need.

Which Benefits Should We Offer Our Employees?

The insurance benefits you choose to offer your employees should, first of all, align with the needs of your workforce.

Ultimately, the best employee benefits don’t have to be lavish or expensive. What matters most is that they are relevant and are valued by your employees.

The best course of action would be to speak to your employees and discover where their priorities lie — it’s no good providing benefits that won’t be used or valued. Only after this can you match their needs with the benefits available and your budget.

Drewberry’s latest Employee Benefits Survey asked workers what their most sought-after employee benefits were. Private Health Insurance topped the list, with almost 1 in 3 employees saying they’d like to see bosses implement this benefit.

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Types of Employee Benefits

Death in Service Insurance

Death in Service Insurance

Death in Service — also known as Group Life Insurance — pays out a lump sum (equal to a multiple of the employee’s salary) to the loved ones of an employee should they pass away during their tenure at your company.

The payout is tax-free providing it is correctly distributed (first delivered into a trust owned by the employer and then distributed to the beneficiaries).

In most cases, a scheme will be set up so each employee will be covered right up to their retirement which will be aligned with their state pension age.

Group Life Cover is the first employee benefits insurance many companies introduce because it is fairly inexpensive while its value to employees is perceived to be much higher than its actual cost.

Policies are also easy to manage and having all of your employees covered under one policy means that no one is left lacking valuable cover.

Profile Pensions

Why Profile Pensions Chose Group Life Insurance…

Why choose Group Life Insurance for your business? It provides security for your employees’ loved ones, as thriving pensions firm Profile Pensions found out when they implemented their own scheme.

It proved so popular among staff that Profile Pensions later looked to increase their benefit, from 3 times salary to 4 times salary after the scheme had been in place for a few years.

“Getting Group Life Insurance in place was a bit of a no-brainer,” says Michelle Donlin, Profile Pensions’ HR and Office Manager. “Our employees get comfort from knowing it’s there and we’re proud to provide that. We work hard to provide good benefits to our staff and show a commitment to our employees, so introducing an employee benefit was really a logical step.”

Business Health Insurance

Provides employees with access to private medical facilities allowing them to bypass the NHS and receive treatment when they need it most.

When an employee is diagnosed with a health problem and requires treatment, they can use their Health Insurance to have their treatment privately.

For an extra premium, employers can add Outpatient Cover to their Group Health Insurance and further speed up the process of having a condition diagnosed prior to treatment.

Business Private Medical Insurance has a range of benefits that can greatly reduce the stress for employees suffering from health problems and get them back on their feet as quick as possible:

  • Reduced waiting time for treatment
  • Extended visiting hours
  • Freedom to choose which hospital or professional provides your treatment
  • Advanced control over when you undergo your treatment
  • Access to the latest procedures and medications.

Life Insurance

Group Income Protection

If an employee is suffering from a health problem that prevents them from working, a Group Sickness Insurance policy will pay out a monthly benefit to cover a percentage of their monthly pre-tax income.

Given the very real risk of suffering a long-term illness, it’s a valuable insurance to have.

Claims are paid to the company; it is then up to the company to distribute the benefit via PAYE or the standard method used to distribute the employee’s salary. As a result, this means that benefits are typically taxed as income.

Employers often have the option to protect their National Insurance and pension contributions.

These benefits can be claimed for up to 1-5 years with a short-term policy or until the employee reaches retirement age / leaves the company with a long-term policy.

Getting Own Occupation Cover…

If you purchase a policy with an own occupation definition of incapacity, your employee will be able to claim these benefits provided their health problem prevents them from working in their specific occupation.

A different definition of incapacity may mean that an employee will not be able to claim if your provider considers them well enough to work in other occupations.

Group Income Protection has a deferred period which defines how long employees need to be out of work for before they can claim their benefits. You would usually set this to align with the employee’s sick pay so the employee can begin claiming their benefits as soon as their sick pay runs out.

Group Critical Illness

Group Critical Illness Insurance

Group Critical Illness Insurance pays out a tax-free lump sum to employees that are diagnosed with a serious illness.

Similar to Group Life Insurance, the payout of a Group Critical Illness policy is usually set to a multiple of the employee’s income, often 2-3 times their gross basic salary.

If an employee suffers one of the ‘critical’ illnesses as defined by the policy, the insurance pays out a tax-free lump sum.

While the payout of a Group Critical Illness policy can be of great help, the limited number of conditions covered by the policy means that some employees suffering from certain medical problems may not be able to claim. That’s where Group Income Protection can be more useful.

Another way these benefits help with employee engagement, retention and morale is through the employee assistance programs that come with many employee benefits.

Why Employee Assistance Programs Are Important

Employee assistance programs provide free services and additional benefits that employees can claim to help them through difficult times in their lives, such such as:

  • Legal advice
  • Financial support / guidance (e.g. debt advice)
  • Medical advice
  • Remote GP services
  • Bereavement counselling
  • Face-to-face counselling / CBT
  • Rehabilitation services / physiotherapy
  • Hospitalisation benefits
  • Career break benefits.

These can provide comfort and support for employees and their families, which can have a range of benefits as a consequence.

When Aviva performed a study on the effects of their Employee Assistance Program, they found that 75% of employees that were supported by the programme returned to work within 6 months if they were absent due to illness or injury.

Employees with access to these programmes can use the services at any time, even if they are not currently making a claim.

This means that Employee Assistance Programs can be used to not only help employees in difficult situations, but also help them avoid these problems in the first place.

Relevant Life Insurance

Relevant Life Insurance for Micro Businesses

If you own a small business, you may not have enough employees to qualify for a Group Life Insurance policy. If that is the case, Relevant Life Insurance is an alternative option.

Relevant Life Insurance works in a similar way to Group Life Insurance because it is purchased by an employer on behalf of an employee.

The difference between the two is that Relevant Life policies are individual covering one person per policy, while Group Life policies covers upwards of three employees under one policy.

The benefits of Relevant Life Insurance is that you can tailor the cover per policy which can be particularly useful for micro companies where there may be a single director.

It is important to bear in mind with a relevant life policy the employees will be underwritten on an individual basis rather than as a group, which could push up the cost of premiums for older, sicker employees.

Getting Employee Benefit Insurance Quotes

Getting quotes for employee benefits is not as simple as it for personal insurance products.

It’s not possible to find quotes for group insurance policies on a comparison website or an online calculator. This is because there are so many details that factor into the cost of a policy.

Nadeem Farid Head of Employee Benefits at Drewberry

Getting employee benefit insurance quotes can be a long winded process involving going to providers one by one.

To make the process easier, our Employee Benefits Consultants do all the heavy lifting and provide a recommendation report comparing all the relevant options.

Nadeem Farid
Head of Employee Benefits at Drewberry

In order to get an accurate employee benefit quote you will need to provide:

  • Group size
  • Date of birth of employees
  • Gender of employees
  • Geographic location
  • Industry and occupation
  • Salary
  • Policy options.

Drewberry’s Employee Benefits Service

Step 1 :: We receive the relevant employee data

We’ll capture the above data points for your workforce so we know the group we’re insuring inside out and can take into account any potential issues straight away, such as with older adults nearing retirement age. This information can be anonymised initially if you prefer.

Step 2 :: We get quotes for you from every single UK insurer

Using our full access to the UK market, we’ll go to every provider and get quotes for your group. That way, you can be assured you’re getting the best terms.

Step 3 :: We put together a market report with our findings

You get access to all the quotes and the various insurers’ terms in one easy-to-understand PDF outlining the cost of cover and which provider will be the best for your workforce.

Step 4 :: We create a client portal, a personalised benefits page for your business

We want to make it easy for your employees to access and use their benefits. Get a custom landing page containing your policy details, important documents and exclusive discounts — see example.

Step 5 :: We’re here for whatever you need

Whether it’s supporting your employees with making a claim or simply just wanting to get to know a bit better how the benefits work, we’re only at the other end of the phone.

Employee Assistance Programs and Additional Benefits

Employee benefits also come with a range of perks and benefits other than the main insurance protection. These supplementary services are free add-ons that employees can use at any time, without having to make a claim.

Some of the more popular types of services offered with group insurance policies are:

  • Legal, medical and financial advice
  • Counselling / cognitive behavioural therapy (CBT) face-to-face or over the phone
  • Bereavement counselling
  • Online and over the phone information and guides
  • Remote GP services.

These benefit everyone and can be highly appealing employee benefits by themselves, regardless of the insurance product attached to them. However, not many people are aware that these services come with their group protection and so they’re incredibly underused, despite the huge value such services can offer.

Many of these services can be used at any time, particularly the provided helplines and information services. Some providers even extend availability of these services to employees’ families.

Andrew Jenkinson, Director at Drewberry

AIG’s new Smart Health mobile app service offers users the opportunity to book a GP appointment and speak to a doctor through their smartphone. It’s offered as part of AIG’s Death in Service package, which we’ve got in place for all our staff.

I recently had to call on Smart Health’s remote GP service myself due to a health issue I hoped would go away but only got worse. It worked fantastically — the appointment was thorough, easy to arrange, didn’t feel rushed and was just what I needed to provide advice and reassurance without having to take time out of the office to wait in my local GP surgery.

Andrew Jenkinson
Director at Drewberry

Additional Insurance To Protect Your Business

As well as benefits for your employees, there are benefits you can take out to protect the health of your business should a key individual within the company die or suffer a critical illness.

This might be to ensure business continuity, to enable the remaining shareholder(s) to buy back an absent shareholder’s shares, or to repay an outstanding business loan.

Considering business owners will face the same problem if an important person falls critically ill as they would if they died, it makes sense to consider adding Critical Illness Cover to your business protection.

Doing so will ensure that if the person becomes severely ill, the company still receives a payout just as if they had passed away.

Keyman Insurance

Covers your business in the event that one of your key employees passes away or is diagnosed with a terminal illness.

Unlike a typically Life Insurance policy, however, Keyman Insurance is designed to protect the business rather than the individual insured.

If your company relies heavily on the talents of a specific employee, Keyman Insurance will provide the business with a lump sum to be used to replace the lost employe, supplement some of the lost profits or to be used in any other way you see fit to ensure business continuity.

Shareholder Protection

Protects your business if one of your shareholders falls critically ill or passes away.

To ensure that a business can continue if one of the key shareholders passes away, a Shareholder Protection policy will pay out a lump sum.

This is used to buy the shares from the deceased person’s family, putting the business in the hands of the surviving shareholders and giving the grieving family financial support.

Business Loan Insurance

Protects the outstanding balance of any business loans, such as mortgages, overdrafts, directors’ loans, bank lending etc.

Can also be used to cover the investment by a venture capital firm.

If the individual insured passes away during the term of the policy / loan, the policy pays out a lump sum into the business to repay the outstanding debt.

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Common Employee Benefits Questions...

  • Employee benefits and HMRC

    There are a few HMRC rules around employee benefits that you’ll want to consider before arranging cover for your workforce. Some benefits are considered P11D benefits in kind and so are taxable.

    How is Group Health Insurance Taxed?

    Group Health Insurance is a P11D benefit in kind and so your employees are taxed on the premiums.

    Their tax code will be adjusted downwards by the same amount as the premiums, so they can earn less before being taxed.

    It’s usually seen as a business expense that you can reclaim against corporation tax.

    How is Group Sick Pay Insurance Taxed?

    When you buy Income Protection as an individual, it’s paid for out of income you’ve already paid tax and National Insurance on (i.e. your wages). That means should you need to make a claim on an Accident and Sickness policy, the benefit you receive is normally tax-free.

    However, when an employer takes out company Income Protection Insurance for their employees, usually it is a business expense you can reclaim against corporation tax.

    As a result, in most cases the benefit from Group Income Protection is subject to income tax when an employee has to claim.

    Group Income Protection is not typically considered a P11D benefit in kind.

    How is Group Critical Illness Insurance Taxed?

    When an employer takes out this cover on behalf of its employees, Group Critical Illness Insurance is usually considered a business expense you can reclaim against corporation tax.

    As well as the premiums being tax-deductible for your company, there’s no income tax on Critical Illness Insurance payouts for your employees, either.

    However, it’s important to consider that, for your employees, generally Group Critical Illness Cover is a taxable benefit in kind (P11D benefit).

    How is Death in Service Insurance Taxed?

    Neither Death in Service premiums nor benefits are typically taxable, making it one of the most tax-efficient employee benefits and a cost-effective way for your employees to have Life Insurance.

    Death in Service policies, for the employer, are generally considered a business expense. This means that there is typically no need to pay corporation tax on Death in Service premiums.

    Meanwhile, Death in Service Insurance is not usually considered a P11D or Benefit in Kind, which means that employees don’t need to pay additional tax if they receive it as an employee benefit.

    Also, thanks to the unique structure of Death in Service cover, there’s typically no inheritance tax for the employee to pay on the benefit, either. This is because the payout of a Death in Service policy doesn’t go directly to the employee’s family.

    Instead, the payment goes into a company owned trust rather than onto the employee’s estate. It is then the responsibility of the employer to distribute the lump sum to the deceased employee’s loved ones.

  • What types of employee benefits are there?

    The most common paid-for insurance benefits for employees include:

    Pensions are also considered an employee benefit. If you have staff, you have to provide each worker with a pension under the auto-enrolment legislation. This involves you as the employer (as well as the employee) paying into a defined contribution pension scheme.

    Of course, there are other types of employee benefits available that can be implemented at little or no cost. These might include anything from:

    • Flexi-time
    • Working from home options
    • Additional holiday based on length of service
    • Days off for birthdays
    • Employee awards
    • Childcare resources
    • Healthy living benefits (e.g. access to discounted gym memberships, an office fruit bowl).
  • Which benefits do employees value the most?

    This is a great question and is so important to consider before setting up an employee benefits package.

    Drewberry conducted a survey of SME workers to find out which employee benefits they’d like to see, with the results being (starting with the most important):

    • Flexible hours
    • Private Medical Insurance
    • Work-from-home options
    • Life Insurance
    • Free snacks
    • Income Protection
    • Critical Illness Insurance
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Get Employee Benefit Insurance Quotes & Expert Advice

Putting together the right employee benefits package can be a difficult task, as is finding the right balance between cost and cover.

At Drewberry, our dedicated experts will collect and compare employee benefit quotes for you from across the entire UK market and provide a recommendation report detailing best insurance solutions for your circumstances.

Why Speak to Us?

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

  • There is no fee for our service
  • We are independent and impartial
    Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
  • We’ve got bargaining power on our side
    This allows us to negotiate better premiums for you than you going direct yourself.
  • You’ll speak to a dedicated expert from start to finish
    You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
  • Benefit from our 5-star service
    We pride ourselves on providing a 5-star service, as can be seen from our 2766 and growing independent client reviews rating us at 4.92 / 5.
  • Benefit from the protection of regulated advice
    You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
  • Claims support when you need it the most
    You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.
Tom Conner Director at Drewberry

If you need any help putting together a competitive employee benefits plan please don’t hesitate to pop us a call on 02074425880 or email help@drewberry.co.uk.

Tom Conner
Director at Drewberry

The staff has been very knowledgeable and I have enjoyed working with Nadeem on setting up our plan.

Kim S
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