A valuable employee benefit, group critical illness cover will pay a lump sum to an employee should they, or their immediate family (if included), be diagnosed with a critical illness such as cancer, heart attack or stroke.
The payment can be used by the employee as they see fit, whether to fund private treatment, make adjustments to their home or go on holiday. The choice is theirs.
As your business grows, choosing a robust employee benefits package can be a daunting task. A myriad of options and policy covers are available and you need to consider administration, cost and any on-going work involved.
Alan Boswell Group will take the time to understand your business needs and help you choose an appropriate programme of employee benefits that suit you, your business and your employee’s needs.
Critical illness cover is designed to support your employees when they need it most. Cheaper than purchasing it individually, a group policy can add real value to an employee’s contract and help demonstrate your commitment to your staff and their family.
Core covers vary from insurer to insurer but will generally include:
A lot of providers also include additional serious illnesses such as brain tumours, permanent blindness or deafness, cardiomyopathy, paralysis or loss of limbs.
In the event of one of your insured employees being diagnosed with a serious illness your policy will make a direct payment to the employee to use as they see fit.
How much does group critical illness cover cost?
Premiums are based on a number of varying factors including the number and age of your employees. However the key factor in premium is the level of cover you choose.
It is typical for offer between 2-3 times an employee’s salary as a payout. This can have considerable impact on premiums if you have high earning employees. An alternative would be to fix the payout at a specific lump-sum.
When you fix the potential payout it can be far simpler to set up a group critical illness policy.
It is important to understand the tax implications for you and your staff.
Group critical illness insurance is usually considered a business expense and is therefore tax deductible.
There is also no income tax to be paid on any payout made to your employees.
However, it is a benefit-in-kind so your staff will be liable to pay tax on the premiums you’re paying on their behalf.
Policies vary but the vast majority will include cover for cancer, heart attacks, strokes, kidney failure, Parkinson’s disease, Alzheimer’s disease, motor neurone disease, major organ transplant, Creutzfeldt-Jakob disease and surgery to fit coronary artery bypass grafts.
A lot of polices will also cover additional illnesses such as aplastic anaemia, bacterial meningitis, benign brain tumours, permanent blindness or deafness, cardiomyopathy, paralysis or loss of limbs.
The cost of a group critical illness policy will be determined by the number and age of employees you decide to insure and the potential payout in the event of illness.
A multiplier of 2-3 times salary is common – but a fixed lump-sum payout may ensure you have a cost-effective policy.
The payout made to an employee is not taxable. However, premiums paid by the company on behalf of an employee are considered a benefit-in-kind and are taxable.
Any claim made may have a financial impact on future premiums.
Yes. Group critical illness insurance can be offset against corporation tax, but the premiums paid are for the benefit of the employee and are therefore taxable against the employees income. The payout itself made to an employee is not taxable. However, premiums paid by the company on behalf of an employee are considered a benefit-in-kind and are taxable. Any claim made may have a financial impact on future premiums.
It is important to ensure your staff understand this before putting in place any policy that can impact their net income.
No, it is not necessary for a business to put in place group critical illness insurance. However, providing a robust and comprehensive employee benefits package alongside a group pension scheme (which is mandatory) can make commercial sense as it demonstrates a commitment to your employee’s welfare and that of their family.
Life-threatening or life-debilitating illnesses are those which tend to be covered under a critical illness policy. They tend to be incurable, such as deafness, paralysis or loss of limbs, or life-threatening, such as cancer or strokes.
Financial Services Adviser
Dee initially completed her A Levels in sport and graphic design, however when considering her career path she decided to join Norwich Union (now Aviva)…
Head of Employee Benefits
Adam began his working life in financial services at Norwich Union (as it was back in 1997), where he worked as a Life & Pensions…
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