Misconceptions About Employee Benefits
Even though many employers are doing all they can to provide a range of employee benefits, there can still be a lack of understanding of how these complex benefits work.
There are some common misconceptions people have when it comes to group risk employee benefits.
The government will cover me when I’m off sick
Although you will be entitled to Statutory Sick Pay (SSP), it is only at a rate of £94.25 per week. In addition, you can only claim SSP for 28 weeks and need to be earning a minimum of £118 per week to qualify.
For many people, this may only be a fraction of their usual income. Potentially leaving you financially vulnerable at a time when you also physically feel weakened. You may wish to consider other types of financial protection you could put in place, as relying on state benefits such as SSP may not provide enough money to cover your household expenses.
My employer will cover me when I am off sick
Your employer is not required to offer anything more than Statutory Sick Pay (SSP). However, some companies do operate a scheme that provides additional sick pay on top of SSP. The terms of this and what you will receive varies. You should be able to get more information about what your employer provides from your HR department.
My company’s life insurance only pays out if I die at work
This is a common misconception. If your company provides life insurance or a ‘death in service’ benefit, your policy will usually cover you all the time you are employed by the company. You do not have to be in work at the time of your death to make a claim or have died as a result of work-related activities.
The benefit commonly pays out a multiple of your salary to your nominated beneficiary. It can also sometimes be linked to the company pension scheme, meaning that you would need to be a member of the pension scheme to qualify. You should be able to contact your HR department to find out more information. If you have this benefit provided by your company, it is crucial to ensure that your expression of wish form is up to date and names the correct beneficiary.
I don’t need life or critical illness insurance if I am young and healthy
In the UK:
100,000 people a year suffer from a stroke, according to the Stroke Association.
360,000 people are diagnosed with cancer each year, based on research by Macmillan.
100,000 hospital admissions each year are due to heart attack say the British Heart Foundation.
With numbers like this, it is a real possibility that you may suffer from a critical illness during your lifetime. If it were to happen to you, what would be the financial impact on your business and your family? There may also be additional costs incurred related to an illness on top of your regular expenditure. Your spouse may have to take time off their job to take you to hospital appointments, and you may need additional childcare. Not to mention the increased stress and overwhelm you and your loved ones may feel at that time – do you really want to add financial worries into the mix as well?
The point of life or critical illness insurance is to cover unexpected eventualities. Being young and healthy is great, but a safety net will always be needed. The financial support provided by critical illness, life insurance and other types of financial protection can help you or your family in times of need.
I have enough savings so it will be OK
400,000 people living with cancer across the UK struggle to pay their household bills as a result of their diagnosis, according to Macmillian. In addition, 39% of people with cancer have used savings, sold assets or borrowed money to cover the costs, or the loss of income, caused by their diagnosis.
While you may have significant savings now, long term illness can erode those much faster than you may anticipate. If you choose to seek treatment privately and do not have private health care cover, then the costs involved can be substantial.
It’s easy to underestimate the cost of care. Even if you don’t use private medical care, costs to complete home alterations, transport to the hospital, and chemist expenses for those with serious illnesses can be detrimental. This is all on top of everyday living costs for you and your family.
Protection planning such as critical illness cover can be used towards funding any one of these challenges listed, such as paying for private health treatment or even funding a well-deserved holiday once treatment is finished.
Insurance companies never pay out
In 2018, Scottish Widows paid £72.5 million in critical illness claims, paying out 98.4% of protection claims.
If you have financial protection and meet the requirements of the policy, then based on the figures above, there is a high probability that you will be able to make a claim and receive the benefits when needed.
Without any protection whatsoever, you potentially have an increased risk of running into financial problems due to a lack of funds if you became seriously unwell.
If this is an area that concerns you or you would like to find out more about protection planning, then we offer a complimentary 30 minute consultation, where you can discuss your concerns with us and understand more about what solutions may be available. Contact us today to make an appointment and see how we can help.
If you found this information useful, you may also want to check out the following:
- How can your company provide you with financial security?
- The financial impact of a serious illness – are you prepared?
- Critical illness: It could happen to you!
MRA help individuals, businesses and families achieve the best quality of life they can with the resources they have. MRA specialise in corporate solutions, cash-flow analysis, life centred planning and much more.
Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.
MRA blog post: How can your company provide you with financial security?