Group Risk

Life assurance and income protection are two very important strands of financial planning. They protect you and your loved ones in the event of injury, illness, disability, and death, and provide hugely important financial benefits when they are needed the most.

While many people purchase these benefits themselves, it is possible for businesses to insure their staff collectively on a Group Life and / or a Group Income Protection policy (referred to as a ‘Group Risk’ policy).

Typically, under a Group Life policy, each employee is insured for a multiple of salary, with the most common structure being 4 times their basic salary.

For income protection, the most common benefit is 75% of basic salary less an offset for the state invalidity benefit. This means that every member is insured for an income protection benefit which will be payable to them if they are unable to work due to injury / illness / disability. There is a waiting period before a claim is paid, which is usually 26 weeks for group policies.

Putting in place these policies for your staff has multiple benefits, including the following:

Staff Retention – In a competitive jobs market, Group Risk benefits are an easy way to enhance an employment package for current and future staff. These hugely valuable benefits would otherwise have to be purchased by staff on an individual basis, with a far higher cost to them.

Economies of Scale – When insurance of this type is purchased on a bulk basis, there are significant economies of scale. If we look at a company of say 20 staff with an average salary of €50,000, which includes 2 directors with salaries of over €100,000, the cost of insuring the entire workforce for life cover and income protection is only marginally higher than if the 2 directors insured themselves each on an individual basis.

Tax Benefits – There is no Benefit in Kind implications for staff who are included in the group risk policies. The company can also write off the cost for corporation tax purposes, which reduces the cost to the company by 12.5% where applicable.

Underwriting Benefits – When a Group Risk policy is being put in place, the insurer will allow a certain amount of benefit to all members before they require any health details or underwriting. The larger the membership number, the higher this will be. This makes the whole process extremely efficient from an underwriting point of view, and in many cases none of the members will need to provide any medical details to the insurer. This can be of benefit where some members of the scheme have pre-existing medical conditions that may otherwise cause difficulty in being insured on an individual basis.

If you would like to find out more about potential options and costings for you and your business, we would be delighted to meet with you and discuss, or to review your current arrangements to recommend the most appropriate course of action for you. 

Please feel free to reach out to me at rossdevlin@pfp.ie to start the conversation.

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