Group Critical Illness Cover

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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.

 

21% of people have suffered long term ill health during their working life. Met Life

What is it for?
 

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…

1. Cancer

4. Multiple Sclerosis

2. Heart Attack

5. Motor Neurone Disease

3. Stroke

6. Parkinson’s Disease

Cancer, heart attack and stroke represent the causes for up to 80% of claims.

What does it cover?
 

How Does Group Critical Illness Work?

Stage 1:
An employee suffers a critical illness condition covered in the policy.

Stage 2:
The business assists the employee in making a claim with the insurer.

Stage 3:
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.

Stage 4:
The business then pays the funds they have received to the employee as a tax free cash lump sum.

How does it work?
 

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’.

Your options
 

Our Delivery

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.

The Research:

We go out to all leading group critical illness insurance providers to gain the most competitive premiums.

The Report:

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.

How can we help?
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This Guide…

Andrew Jenkinson - Drewberry
Written by:
Michael Englefield
Content Manager at Drewberry
⏰  10 min read
 

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.

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what's covered by business critical illness insurance?

What Does Group Critical Illness Cover?

Group Critical Illness Insurance covers around 12 major or critical illnesses, with the most common being:

  • Cancer
  • Heart attacks
  • Strokes
  • Kidney failure
  • Motor neurone disease
  • Parkinson’s disease
  • Alzheimer’s disease
  • Major organ transplant
  • Surgery to fot 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.

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Excellent service at convenient times of the day specified by me. All product options were clearly outlined and I am very pleased.

Matthew Draper
11/07/2018
company paid critical illness cover

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.

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

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.

Investors in People have revealed…

  • 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.
nadeem farid, employee benefits consultant at drewberry

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
Employee Benefits Consultant at Drewberry

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Key Group Critical Illness Options

There are a range of factors which affect 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.

covering employees with critical illness cover

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.

emma wilson, employee benefits consultant at drewberry

To discuss the difference between Group Critical Illness Insurance and Income Protection, and to see which one might be best suited for your company, speak to one of Drewberry’s team on 01273646484.

Emma Wilson
Employee Benefits Consultant at Drewberry

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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.

 nadeem farid, employee benefits consultant at drewberry

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
Employee Benefits Consultant at Drewberry

 

Group Critical Illness, HMRC and Tax

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.

How much tax will I pay on Group Critical Illness Cover?

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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Top 5 UK Critical Illness Insurance Companies

Best 5 UK Group Critical Illness Insurance Providers

Aviva

Aviva

  • Maximum cover: The lower of £500,000 / 5 times salary
  • Minimum lives: 5
  • 15 critical illnesses are covered as standard with the option to add an additional 26 illnesses with Aviva’s extended cover
  • Children’s cover included as standard
  • Maximum policy cease age: 70
  • For an additional premium, employees can get access to a £100,000 cancer drugs fund for cancer drugs not available on the NHS. The policy also comes with a second medical opinion service via Aviva’s Best Doctors programme.
Canada Life

Canada Life

  • Maximum cover: £500,000
  • Minimum lives: 5
  • 13 critical Illnesses are covered as standard with the option to add cover for an additional 28 serious illnesses
  • Children’s cover included as standard
  • Maximum policy cease age: 70
  • Comes with: Personal Nurse Service, a telephone-based service providing access to a qualified nurse; Second Medical Opinion, which provides employees and their families with access to a second medical opinion if diagnosed as critically ill; and Treatment Sourcing, where Canada Life will find competitively-priced private healthcare (which will be at the employee’s expense).
Ellipse

Ellipse

  • Maximum cover: The lower of £500,000 / 5 times salary
  • Minimum lives: 2
  • 12 critical Illnesses are covered as standard with the option to add additional cover for a further 29 serious illnesses
  • Children’s cover included as standard
  • Maximum policy cease age: 70
  • Comes with RedArc’s critical illness service, which includes a dedicated personal nurse adviser to help and support the employee
legal & general

Legal & General

  • Maximum cover: The lower of £500,000 / 5 times salary
  • Minimum lives: 50
  • 12 critical Illnesses are covered as standard with the option to add additional cover for a further 26 serious illnesses
  • Children’s cover included as standard
  • Maximum policy cease age: 70
  • Includes access to a 24 hour/365 online/telephone service which offers counselling, legal representatives and nurses
Unum

Unum

  • Maximum cover: The lower of £500,000 / 5 times salary
  • Minimum lives: 3
  • 11 critical Illnesses are covered as standard with the option to add cover for an additional 27 serious illnesses
  • Children’s cover included as standard
  • Maximum policy cease age: 70
  • Includes access to a specialist cancer support network that provides access to the services of Harley Street Concierge Ltd. Also available is Unum LifeWorks, an employee assistance programme offering employees access to a 24/7 helpline for advice on everyday issues such as debt and childcare.

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Group Critical Illness Cover Advice

Get Expert Group Critical Illness Insurance Advice

emma wilson, employee benefits consultant at drewberry

When it comes to employee benefits, including Group Critical Illness Cover, it’s tim 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 01273646484.

Emma Wilson
Employee Benefits Consultant at Drewberry

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FREE Independent & Impartial Advice
Type of Cover
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