Life Insurance and Income Protection in Top 5 Employee Benefits

In a recent study by Canada Life it was found that life insurance (also known as life assurance) and income protection are highly valued by employees, having been in the top five employee benefits for the previous two years.

In the study employees at a large number of organisations were asked to rank which employee benefits they valued the most. The 2010 results showed that group life insurance was placed as the third most important benefit (up from fourth place in 2009) and group income protection as the fourth most important benefit (down from second place in 2009).

As most individuals are well aware of the benefits of life insurance as a means of family and mortgage protection but income protection is a lesser known policy. This latter type of cover pays out a monthly benefit usually until retirement if the employee is unable to work due to illness or injury.

Despite the importance employees place on these plans the research shows that only 9 per cent of UK employees receive life assurance and even fewer (at 6 per cent) get income protection insurance as part of their employee benefits offering.

For the second year running the most valued benefit by employees was their company pension, which is offered by 52 per cent of businesses.

Moving up one place to second place was a good holiday entitlement, which is reported to be offered by 42 per cent of employers.

Braking its way into the top five was redundancy cover, up from seventh place in 2009. This type of benefit is commonly associated with redundancy pay, however, moving forward more employers should consider looking to the insurance market to provide extended and possibly more cost-effective protection (given the value placed on this benefit by employees).

Taking note of which benefits staff find the most valuable is an important tool for gaining the most out of employee reward spend, in terms of staff retention, attraction and engagement.