Organisations significantly overestimate the cost of group risk financial protection plans for their employees, meaning thousands of UK workers may be left without appropriate cover, according to research by trade body Group Risk Development (GRiD).
GRiD said that offering Group Life Assurance to an entire workforce often costs less than 0.5% of payroll. However, 70% of employers believe that it would cost them a lot more than that, with 8% believing it will cost them more than 10% of payroll.
It’s a similar story when it comes to Group Income Protection, which typically costs less than 1% of payroll, yet 60% of employers believe the cost to be far higher. In fact, 9% think it will cost them in excess of 10%.
Nevertheless, the survey of 501 UK firms, with between five and 1,000 employees, also found that 60% of employers accept they have a greater role to play when it comes to protecting the health and welfare of their employees.
Providing financial safeguards for workers through Group Risk protection products can be one of the most cost-effective ways for organisations to do just this. The problem is that most just don’t know it.
Many employees believe that the state will look after them financially if they find themselves unable to work. The reality, though, is that most overestimate the value of Statutory Sick Pay (SSP) and other state benefits, widening the already existing UK protection gap.
Group Risk protection can help to fill this gap by providing valuable benefits in real terms. The fact that it’s much more affordable than businesses realise makes it a win-win for employers and employees.
Competitive Group Risk Market is Good News for Employers
In light of the tangible value it brings and the discovery that many employers had previously overestimated its cost, GRiD is urging more organisations to consider providing Group Risk protection for their employees.
At present, the Group Risk marketplace is a competitive one, with new products being developed and older products being enhanced all the time. This is great news for employers as they are also becoming increasingly cost-effective.
Furthermore, employee benefits is one area where an organisation can set itself apart from its competitors and look to not only attract the best staff in the market, but also retain the ones it has.
Katharine Moxham, spokesperson for GRiD, said that even though every business has its own needs and requirements, there are solutions available that meet every budget. That’s why there is no reason why all businesses can’t provide some form of Group Risk protection for their workers.
“Group Risk protection policies cost less than many realise: savings can be made by not doubling up on benefits – such as paying separately for an EAP which is already included within a Group Risk policy – and there’s great value to be had by using them. We are encouraging employers to talk to their group risk advisers to investigate the right option for them and make sure they’re getting maximum value,” she said.
It is important for us to get the message out to all employers that Group Income Protection is a valuable and cost effective benefit.
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