Employee benefits – more than just an insurance policy

May 13th 2024

With such a large finance industry in Guernsey, and many options for employees in the sector, employee benefits can be a key factor in staff attraction or retention. It is therefore important that policies in place are suitable for the company’s and employees’ needs, and, crucially, will pay out when and what is required.

As Sir Richard Branson once said: “A company’s employees are its greatest asset and your people are your product.”

This reminds us that it is important to ensure they are suitably motivated at work, to try to improve both retention and effectiveness.

Fredrick Herzberg[1] also suggested that satisfaction and dissatisfaction at work actually arise from different factors, and employee benefits fall into a category whereby they can be a powerful de-motivator if they are not up to scratch.

So, what insurance-based employee benefits are the most popular, or expected? And what additional considerations are there for Channel Island companies accordingly? Let’s look at a few of the main benefits.

Private Health Insurance

A popular benefit provided my many companies in Guernsey, which is an indemnity policy providing access to private healthcare, either just in Guernsey or further afield (depending upon the policy). This is well received in Guernsey, particularly when it helps with costs that the States of Guernsey don’t pay towards, in particular, primary care costs.

It can also enable members to access alternative medical professionals, and/or enjoy shorter waiting times, due to opting for private payment. This can result in better outcomes for both the member and the company, if they are able to remain in or return to work due to prompt diagnosis and/or treatment.

Companies with offices across multiple jurisdictions do need to be cognisant of the different healthcare systems, and ensure the policies provided for each office is suitable.

Similar but separate to health insurance is dental cover, which is also popular, particularly with those members with children.

Death in service

Death in service is a policy that is intended to replace an employee’s loss of income should one die whilst employed – and for this to be provided to the family. This type of policy was popularised back when generally only the male of the household worked, and so, without his earnings, the family would have little-to-no continuing income.  Today, many households have two people working, but therefore most rely on two incomes too, and so death in service is just as important today.

Whilst the family can spend the funds (if received) however they like, we do remind clients with mortgages, liabilities and/or children, that they may not want to rely on death in service to provide for these if they were to die.  This is because, not only would they then not have the proceeds available to help cover the lost income, but it is also possible that death in service benefits may not apply with all employment, so could fall away if they were to change jobs (at which point it may be expensive or difficult to get cover), and/or if they were ill and unable to work.

There are key considerations for the employer with these types of policies too.  Guernsey has different rules to the UK that impact upon these policies, so it is important that these are factored in when setting up or renewing the policy.  In particular, there are trust requirements for Guernsey-approved schemes that differ to the UK, and we would recommend these are considered accordingly.

Permanent Health Insurance (aka Income Protection)

A great benefit to offer, permanent health insurance will provide funds on an ongoing basis if the employee is unable to work due to illness or accident for a long period of time. This policy provides either the company or the employee with a proportion of their income, and will continue to pay out whilst they remain an employee – until they are well enough to return to work (if applicable). This benefit can be of great help to an employee, as otherwise household income could drop significantly. However, again, members should not rely on this alone, as the benefit amount is generally less than their full income, so other personal protection should be considered.

Companies need to also consider that there are still additional costs to employing someone over and above their salary if they are to remain as an employee whilst unwell (such as pension, social security, and other benefit costs), and there are insurance options for these costs too accordingly.

Critical Illness Cover

This benefit provides a lump sum payment upon diagnosis of a critical illness, which can provide the household with cash to assist when income may be dropping, or expenses may be increasing. It is more expensive than death in service, as we are more likely to suffer a critical illness than die whilst employed. It is therefore a great benefit to offer, if affordable, and is complementary to the other policies above.

We have seen all these benefits pay out and the massive difference they can make to companies and employees at difficult times. We also offer support with the claims, to ensure that policies are being used correctly and to help companies or families as much as we can when they already have enough to consider.

For all of the benefits above, there is a wide range of cover options and benefit levels, and it is worth considering how they interact with each other. In this regard, speaking with a broker or adviser in relation to your full employee benefit package can be a great help in ensuring suitable cover at a reasonable premium and within budget. If you have employee benefits, an adviser can also help ascertain any protection gaps you may need to insure personally.

Network Insurance & Financial Planning Limited can offer holistic advice across all types of employee benefits (including pensions, which are the buzzword at the moment) and personal policies, so whether you are a new or established company, please get in touch with us at advice@network.gg or give us a call on 01481 701400, and one of our qualified advisers will be delighted to review your needs and/or existing policies, and assist accordingly.

 

 

[1] Herzberg et al, 1993