Why Group Critical Illness Insurance?
Group Critical Illness Cover pays a lump sum benefit should a member of staff suffer a serious illness.
The three most common conditions insurers pay out a claim for are cancer, heart attacks and strokes.
Additional benefits often include an Employee Assistance Program and Best Doctors Service.
31% of people have suffered long term ill health during their working life – Aviva
What Does Group Critical Illness Cover?
Employer Critical Illness Insurance pays out a lump sum if an employee suffers a serious illness that is specified in the policy terms. Most group schemes cover at least 12 core critical illness conditions.
Commonly covered critical illnesses…
4. Multiple Sclerosis
2. Heart Attack
5. Motor Neurone Disease
6. Parkinson’s Disease
Cancer, heart attack and stroke represent the causes for up to 80% of claims.
How Does Group Critical Illness Work?
An employee suffers a critical illness condition covered in the policy.
The business assists the employee in making a claim with the insurer.
The insurer pays the sum assured to the business as the policy owner, often the payout tends to be a multiple of the employee’s gross salary.
The business then pays the funds they have received to the employee as a tax free cash lump sum.
Your Key Policy Options
Level of Cover
The level of cover is usually set as a multiple of basic salary before tax, although fluctuating emoluments can be covered with some insurers.
Tip: It is common for the level of cover to range from one to two times basic salary, on average, although some organisations do provide higher levels of cover.
Length of Cover
Although group schemes are reviewable annually the plan can pay out at any point up to a certain age, which is usually set in line with the company’s retirement age.
Tip: It was common for schemes to run until age 65 but with the removal of the fixed state pensionable age plans should now run until ‘age 65 or State Pensionable Age’.
Being independent group insurance experts we pride ourselves on being the experts, knowing every insurance product we offer inside out and back to front. Here’s how we work:
The Fact Find:
We will talk you through the options available and capture vital information about the employees to be covered.
We go out to all leading Group Critical Illness Insurance providers to gain the most competitive premiums.
We email you a short report with pricing and insurer recommendations for the various options we’ve discussed. When you are happy to go ahead in many cases we are able to complete the application for you over the phone.
What is Group Critical Illness Cover?
Group Critical Illness Cover is designed to pay out a tax-free cash lump sum to your employees should they develop a severe (i.e. critical) illness as defined in the policy terms.
The most common causes of claims are for cancer, heart attacks and strokes, although policies usually incorporate up to around 12-15 other critical illnesses.
A business critical Illness policy is paid for by the company for the benefit of the workers. You cover your employees for a multiple of their salary, usually between 2 and 3 times their annual gross (pre-tax) pay. However, with most insurers you can cover up to 5 times salary, up to a maximum of £500,000.
When an employee is diagnosed with a critical illness, the policy pays a lump sum to the individual to provide some financial stability during such difficult times. The funds can even be used to cover medical expenses etc. if they want to opt for private treatment or pay for drugs/operations not available on the NHS.
What Does Group Critical Illness Cover?
Group Critical Illness Insurance covers around 12 major or critical illnesses, with the most common being:
- Heart attacks
- 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 opt for your policy to cover an additional 25 or so serious illnesses, which includes conditions such as aplastic anaemia, bacterial meningitis, benign brain tumour, permanent and irreversible blindness/deafness, cardiomyopathy, paralysis and loss of limbs. These will all be detailed in your policy documents.
Children of employees are typically covered for free up to the age of between 18 and 21 with a set of specific child-related critical illnesses. Cover for them is typically limited to between approximately £20,000 and £25,000. You can also opt to include workers’ spouses and civil partners in Group Critical Illness Cover, but this will be at an additional cost.
Josh at Drewberry was extremely helpful and friendly in answering my many questions about the policy before I went ahead.
Why Provide Company Critical Illness Cover?
Cancer makes up the bulk of Group Critical Illness claims. According to Cancer Research UK, there were 359,960 new incidences of cancer in 2015 and someone is diagnosed with cancer every 2 minutes. 1 in 2 of us alive today will get cancer at some point in their lives.
Meanwhile, according to the British Heart Foundation:
- 7 million people in the UK live with cardiovascular (heart and circulatory) disease
- 3 million are living with coronary heart disease
- 915,000 have survived a heart attack
- Over 500,000 are suffering from heart failure
- About 1.2 million people have survived a stroke.
It is important to recognise that not all instances of the above will result in a successful claim, as policies usually pay out on the occurrence of a condition at or above a set severity as defined in the policy’s terms.
As well as providing cover for your employees against cancer, heart attack, strokes and a range of other serious illnesses, there are a number of benefits to getting cover.
- Almost 1 in 5 UK employees are unhappy in their job due to a lack of benefits.
- 44% of UK employees considered company benefits to be one of the most important qualities that attract them to a new company.
The Chartered Institute of Professional Development undertook a survey which found 54% of people currently looking for a new job are looking for better pay or benefits, citing this as the main reason for their move.
For employers, an employee Critical Illness Insurance scheme has the potential to improve the quality of the business.
An impressive employee benefits package can:
- Attract new employees
- Improve employee retention and engagement
- Reduce stress and associated staff absenteeism.
Group Critical Illness, like other employee benefits, is a great way to show your employees that you value them and their work. Many policies come with extensive employee assistance programmes which include access to phone-based counselling services, for instance. This has been shown to reduce employee absenteeism and improve productivity and performance in the workplace.
Also available as part of employee assistance programmes include helplines for those newly diagnosed with cancer or access to a second medical opinion.
Nadeem Farid, Cert CII
Employee Benefits Expert at Drewberry
Key Group Critical Illness Options
There are a range of factors which affect the cost of your Group Serious Illness Insurance premiums, some relating specifically to your organisation and others relating to the level of cover.
Level of Cover
The level of cover is often laid out as a multiple of salary. On most policies the benefit is set at at between 2-3 times salary to a maximum benefit of £500,000 or 5 times salary.
The greater the level of cover you provide your employees the more expensive the premiums. In addition to this the greater the sum assured the more likely an employee is to require manual underwriting.
Range of Employees Covered
While it’s common to cover every employee at your organisation with Group Critical Illness Insurance, the policy can be set up to cover certain groups of employees only. For instance, you could choose to only cover management or certain levels of employees. You can also put a grading structure in place, so that more senior staff are covered for a higher multiple of salary.
Whatever you choose the premiums will be based on the group risk. The higher the salaries and the older the age of the employees covered the more expensive Group Critical Illness Cover will be.
Range of Illnesses Covered
A standard list of critical illnesses is likely to cover around a dozen of the most serious conditions; opting for a comprehensive plan will add an additional 25 or so conditions to the policy terms.
Including Total Permanent Disability
Total and Permanent Disability is often an additional option on a plan and does not cover an illness per se but covers an employee should they be unable to work in their own occupation as a result of being made totally and permanently disabled. This might be through illness or injury.
Group Critical Illness Cover vs Income Protection
One other option to consider that may be more appropriate for your company and your employees is Group Income Protection.
Rather than paying out a cash lump sum in the event of an employee falling ill, Group Income Protection pays a proportion of the employee’s wages into the company should they be out of work, which you then distribute to the individual as a form of sick pay.
Company Critical Illness Insurance only covers a small number of very serious illnesses – the maximum illnesses covered by the market is fewer than 45. Group Income Protection, on the other hand, will cover your workers for anything that medically prevents them from doing their jobs.
How Much Does Group Critical Illness Cover Cost?
The cost of Company Critical Illness Insurance depends on a variety of factors, with the major ones being:
- The age of your employees
- The number of employees covered
- The level of cover you opt for
- Whether or not you choose to add ‘additional’ critical illnesses to your policy.
It’s very hard to provide estimates as to the cost of Critical Illness Cover for a business because it really does depend largely on the data you provide for the employees you’re looking to cover.
Once we have this data, we’re in a position to go out to all the UK’s best providers to find you and your company the most suitable options. Get in touch today on 01273646484 to take advantage of our employee benefits service.
Nadeem Farid, Cert CII
Employee Benefits Expert at Drewberry
Group Critical Illness, HMRC and Benefits In Kind
When you purchase a Group Critical Illness policy, it’s taxed slightly differently from the Critical Illness Cover you’d take out as an individual.
When you buy Critical Illness Cover for yourself, you pay for it using income you’ve already paid tax and National Insurance on (i.e. your wages).
However, 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.
As there’s no tax to pay on the premiums or the payout, it’s important to consider that, for your employees, generally Group Critical Illness Cover is a taxable benefit in kind (P11d benefit). This means they’ll have to pay tax on the premiums you’re paying on their behalf.
This is done via HMRC. HMRC will alter each employees’ tax codes to decrease their personal allowance – the amount they can earn before paying income tax – by a sum equivalent to the value of the premiums you’re paying for them.
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Get Expert Group Critical Illness Insurance Advice
When it comes to employee benefits, including Group Critical Illness Cover, it’s time-consuming and often quite difficult to get cover by yourself.
At Drewberry we do all of this hard work for you – all you need to do is make one phone call. We’ll then put together a free report on the best Business Critical Illness Insurance providers for your needs and circumstances. Speak to the Drewberry experts for this bespoke service today on 02074425880 or email us at firstname.lastname@example.org.
Employee Benefits Consultant at Drewberry
Why Work With Drewberry™?
- We placed over £1 billion worth of risk with insurers for our clients in 2017
- We were nominated for Protection Intermediary of the Year at the Protection Review Awards in 2016, 2017 and 2018 and the Cover Excellence Awards in 2016 and 2017
- Our ethos is to provide the best possible service demonstrated by the growing number of 5-star rated reviews with 98% of our clients saying they would recommend us
- Rob and the rest of our insurance experts are frequently quoted in leading papers such as The Independent and Financial Times with a reputation in the media as an authority in our industry.