Group Critical Illness Insurance

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.