Why investing in employee wellbeing will boost your business

Financial benefits like group life, critical illness and income protection can enhance employee satisfaction and drive company success.

When considering what benefits to offer your employees, there are a whole raft of options out there. When it comes to financial assistance, the key options are group life, critical illness and income protection. All aim to mitigate the negative economic impact of an employee dying or becoming ill. These benefits provide your employees and their families with financial support when they need it most. Vitally, they also act as a tool to attract and retain top talent.

To understand why these policies add significant value to your employees, consider these health challenges affecting us all:

Cancer: the number of people estimated to be living with cancer will rise from three million in 2020 to four million by 2030 (Macmillan).

Mental health: 1.76 million people in England were referred to NHS talking therapies for depression and anxiety in 2022/23 (NHS England).

The strain on the NHS: There’s still a care backlog since the pandemic, with a 78% increase in the number of people on the heart care waiting list (NHS England).

Cost of living crisis: Two out of three employees struggling financially report signs of poor mental health (Mental Health at Work).

Hybrid working: Hybrid working may contribute to and exacerbate musculoskeletal conditions (Institute of Occupational Health and Safety)

Benefits

By supporting employees to deal with these challenges, employers are likely to benefit from higher levels of:

Health: Of those with employer-provided support, 33% are less likely to report poor mental or physical health.

Absence: On average, happy and healthy employees take nine fewer sick days and 5.5 fewer days of presenteeism a year.

Productivity: Eight in ten employees say they are more productive at work when feeling happy and healthy.

Engagement: Employees would be willing to pay around £370 per year to access such benefits, rising to almost £500 for a comprehensive support package, demonstrating their high perceived value.

Retention: 6 in 10 employees say that health and wellbeing services provided at work would make it more likely for them to stay with their employer. (Source: WPI Economics Study, Nov 2023).

Many providers offer a range of added-value services, including:

• Remote GP
• Mental health support
• Bereavement support
• Medical second opinions
• Physiotherapy
• Legal advice and more!

How do these policies work?

Group Life Protection

Also known as a ‘death in service’ benefit, this provides lump sums, pensions (or both) for the families and dependents of deceased members. The amount paid out will typically be a multiple of the deceased’s salary.

Usually, the cost of providing this benefit is a deductible business expense for the employee who receives relief from corporation tax. Additionally, premiums are not treated as a benefit in kind for employees.

Group Critical Illness

Group critical illness protection provides a lump sum benefit to members diagnosed with a range of specified conditions. The insurer sets out the conditions covered, including heart attacks, cancer and stroke. The sum paid out can be fixed or a multiple of salary and is usually tax-free.

The cost of this cover is usually treated as a deductible business expense and receives relief from corporation tax. However, the cost will be treated as a benefit in kind for the employee.

Group Income Protection

Group income protection plans provide a continuing income for employees too ill to work. Employers set them up to enable them to continue paying income to sick or incapacitated employees. National insurance and pension contributions can be covered, too. Doing this transfers all the direct costs of retaining an ill employee to the plan provider. Upon a claim, the insurer will pay the benefit to the employer, which would be classed as a taxable trading receipt. The employer then deducts tax and national insurance before paying the net amount to the employee as sick pay, usually meaning a tax-neutral situation for the employer. Premiums paid by the employer typically receive tax relief and are not taxed as a benefit in kind for employees.

How much will it all cost?

The coverage provided by these policies can vary, depending on the employer’s budget. For example, the payout provided by a group life policy can be increased or decreased, and the scope of conditions covered by a group critical illness policy can be extended. Similarly, the cost of providing these benefits will depend on the number of individuals covered, their ages, salaries, the industry they work in and even the location of their workplace.

Conclusion

Opting for comprehensive employee benefits is a strategic investment in the health and vitality of your workforce. Support such as group life, critical illness and income protection insurance can significantly enhance your team’s wellbeing and productivity. These benefits offer peace of mind to your team but also position your company as a caring and responsible employer.

Contact the BAND team for tailored advice on implementing effective benefits strategies that align with your business goals and employee needs.