Here are a number of relatively common misconceptions applying to company insurance schemes.

Employees do not value them

This may simply not be the case.

Responsible individuals (presumably the sort of employee your organisation wishes to recruit) typically recognise that there are certain risks to their income levels, their standard of living and perhaps the financial well-being of their families.

These risks arise in areas such as critical illness and premature death etc.

Those individuals may be inclined to purchase insurance against such risks and if such group insurance cover is provided as part of their employment benefits package, they may value it highly.

The valuation may not only be financial but also psychological and help to form a bond between employee and employer.

They only cover death in service provisions

By contrast, group insurance schemes may provide benefits to employees in areas such as:

  • critical illness cover;
  • private health insurance;
  • income protection cover (i.e. longer term sickness).

The taxation issues are complicated

By definition, any form of taxation may require a little consideration and sometimes specialist advice.

In the case of these schemes, they may be a very tax-efficient way of providing benefits to employees from the company’s viewpoint.

In some situations there may be taxation implications for recipients but these are typically relatively easily understood by individuals and accepted, given the far greater benefits of having the cover over not having it.

It complicates pay settlement negotiations

That may not be the case.

Individual employees, their unions, associations and professional bodies, are typically more than willing to discuss the benefits as part of the package deal.

There are no advantages to employers

The benefits of having a more contented and settled workforce cannot be overestimated.

Particularly in the case of private health insurance, there may be very direct and tangible benefits to having employees with fast access to expert medical attention, given that it may result in a reduction in absence days.

It is sometimes overlooked that there are also group schemes available providing a range of benefits to organisations, such as key individual insurance cover that would provide an organisation with a lump sum to help cope with the death or critical illness of a key member of staff.

These are all big company schemes

In fact, there is a range of schemes available that may be tailored to suit the particular circumstances of your organisation.

SMEs may benefit from implementing these types of schemes, just as much as large international corporations.

It is easier just to deal with everything in base salary terms

In terms of tax advantages, this sentiment is highly debatable.

The psychological and relationship benefits of offering this type of cover to your employees have already been touched upon.

It is also sometimes useful to help manage employee relationships and staff retention in terms other than simply the harsh figures that are associated with basic salaries.