What Is Group Critical Illness Cover? How Much Does It Cost?

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21-10-2020

Group Critical Illness Cover will pay out a tax-free cash lump sum should an employee suffer a serious illness such as cancer, heart attack or stroke whilst working for your business. The payout is typically between 1 and 5 times an employee’s annual salary and most policies cover around 12 serious conditions as standard.

The payout can help with everyday expenses as well as covering the cost of any lifestyle changes that may be needed due to a serious medical condition.

Which Serious Illnesses Are Covered?

As part of ‘core’ cover, insurers cover around 12 conditions. The most common are:

  • Cancer
  • Heart attacks
  • Strokes
  • Kidney failure
  • Motor neurone disease
  • Parkinson’s disease
  • Alzheimer’s disease
  • Major organ transplant
  • Surgery to fit coronary artery bypass grafts
  • Creutzfeldt-Jakob Disease (CJD).

As well as these ‘core’ illnesses, you can choose to cover an additional 20-25 or so conditions for an extra premium. Conditions under this umbrella include:

  • Aplastic anaemia
  • Bacterial meningitis
  • Benign brain tumour
  • Permanent and irreversible blindness / deafness
  • Cardiomyopathy
  • Paralysis
  • Loss of limbs.

The conditions a policy covers and their definitions will vary from insurer to insurer. While this information will be in your policy documents, it can be in complicated medical jargon. It may therefore be beneficial to ask your adviser for assistance.

Adding Total Permanent Disability

Total and Permanent Disability is another additional option.

It covers staff should they be unable to work in their own occupation as a result of becoming totally and permanently disabled. This might be through sickness or injury.

Do We Need This Insurance?

Everyone faces a very real risk of critical illness during their working lives.

Complete UK guide to group critical illness cover

Offering Group Critical Illness Cover sends a clear signal that you value your employees and are there to support them when they need it most.

Furthermore, an impressive employee benefits package can:

  • Attract new employees
  • Improve employee retention and engagement
  • Reduce stress and associated employee absenteeism.

Benefits For Employees

Our individual protection survey found only 9% of workers surveyed had personal Critical Illness Cover. Anything employers can therefore do to close this protection gap can make a big difference.

Meanwhile, when it comes to the payout, employees can use it as they see fit, perhaps:

  • Adapting their home to accommodate a new disability.
  • Paying for medical treatment potentially not yet provided by the NHS due to cost, such as cutting-edge cancer drugs.
  • Covering the cost of medical / mobility equipment.
  • Repaying a mortgage.
  • Staying afloat financially if the condition prevents them from working.

How Much Does Group Critical Illness Insurance Cost?

Every business is unique. As such, it is difficult to estimate the cost of Group Critical Illness Cover without doing research for your business.

Your premiums will depend on:

  • The age of your employees
  • The number of employees covered
  • The level of cover you opt for (i.e. multiples of salary)
  • Whether you choose coverage for ‘additional’ critical illnesses.

As an illustration and very rough guide, we’ve laid out insurance quotes for two different businesses in the table below.

Services Company

Technology Company

Location

Cornwall

London

Employees

100

20

Level of Cover

2 x Basic Salary

1 x Basic Salary

Illnesses Covered

Core + Additional

Core + Additional

Cost
per employee

£9.53
per month

£8.60
per month

Quotes correct as of 27/05/2020
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How Does HMRC Tax It?

For employers, it’s usually an allowable business expense against your corporation tax bill. Meanwhile, staff usually receive the payout free from tax.

Is It A P11D Benefit In Kind?

However, it’s important to know that Group Critical Illness Cover is a taxable benefit in kind (P11D).

Your employees therefore have to pay additional tax on the premiums you pay on their behalf.

Usually, HMRC deducts the cost of premiums you’re paying from workers’ personal allowances. Having a lower personal allowance means income tax kicks in earlier on employees’ wages.

As an employer, you’ll also have to pay employer’s National Insurance contributions on the premiums.

Who Are The Best UK Group Critical Illness Insurance Providers?

Drewberry is independent. That means we work with every leading UK insurer, searching the entire market to find the best fit for you, your business and your staff.

The top group risk insurers we deal with are:

  • AIG
  • Aviva
  • Canada Life
  • Legal & General
  • Unum

The Best Additional Benefits

On top of the core benefit of paying out for critical illnesses, additional benefits insurers usually include free with policies often include:

  • Employee assistance programs
  • Digital GP service (read our director’s experience using it)
  • Second medical opinion service / best doctors (offering access to leading global experts if an employee becomes ill and wants a second opinion on their diagnosis or treatment)
  • Mental health support service
  • Physiotherapy
  • Medical helplines staffed by trained nurses
  • Legal advice.

Where Does It Fit Into An Employee Benefits Package?

While Group Critical Illness Cover is rarely the first benefit companies introduce, it’s nonetheless a valued employee benefit.

You might look to introduce it after you’ve put in place:

Group Critical Illness Cover vs Income Protection

Critical Illness Cover pays out a cash lump sum if an employee falls ill. Group Income Protection, on the other hand, pays a proportion of an employee’s wages every month for a set period.

While Critical Illness Insurance only covers a few very serious conditions, Income Protection covers staff for anything that medically prevents them working.

Ultimately, the most common claims on Group Income Protection are for issues Critical Illness Cover doesn’t pay out for, including mental health problems and musculoskeletal issues.

Given the vast array of illnesses and injuries Income Protection covers, it may prove a better option for your staff.

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Frequently Asked Questions...

  • What's the Difference Between Critical Illness And Terminal Illness Cover?

    Critical Illness Cover pays out a cash lump sum if you’re diagnosed with one of the critical medical conditions listed on the policy.

    Your condition doesn’t have to be life-limiting for a successful claim. You could claim for a cancer diagnosis you later recover from with treatment, for example.

    Terminal Illness Cover, on the other hand, is typically included for free with Life Insurance. It sees the policy pay out early if a doctor says you have less than 12 months to live.

  • Does It Include Childrens Cover?

    A policy typically covers children of employees for free up until the age of 18. They’ll have cover for a set of specific child-related conditions. You can also include employees’ spouses / civil partners, but this will be at an additional cost.

  • Is It Voluntary Or Company Paid Insurance?

    We’re often asked whether a company can introduce serious illness cover on a voluntary basis, with only employees who opt in paying premiums out of their own pockets.

    Unfortunately due to potential adverse risk the policy must be company paid covering all employees or a clearly defined category of employee.

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Get Quotes & Compare Group Critical Illness Cover

Setting up and maintaining a competitive benefits package can be a bit of a headache. We do the heavy lifting for businesses of all sizes throughout the UK so they can focus on what they are best at: delivering their own proposition.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service 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.

If you need help setting up group critical illness cover give us a call on 02084327333 or email help@drewberry.co.uk to speak to an expert adviser.

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

Kim S
22/06/2020
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