Life and medical insurance plans are two of the most common benefits employers can provide their employees. They are accessible, as you can rely on a business insurance provider for help in creating custom plans.
Are you thinking of incorporating life insurance and medical coverage into your employee benefits package? Read on to know what you should consider and remember.
Features and Characteristics
Employee life and medical insurance plans are typically group insurance plans. They provide excellent value for money to employees because they are relatively inexpensive compared to individual insurance policies. That said, group insurance policies may pay out smaller benefits.
For instance, employee life insurance plans calculate death benefits based on the annual salary; they can be double, triple or some other multiple of this amount. Thus, if an employee earns AED 150,000 per year and your group life insurance pays three times the annual salary, that employee’s life insurance benefit is AED 450,000. Meanwhile, an employee who earns AED 75,000 on the same plan has a death benefit of AED 225,000.
Employee insurance plans greatly vary in their inclusions, premiums and benefits. You should be able to negotiate terms with your insurance provider. That said, the following factors affect how much power you have at the bargaining table:
- The average age of your employees: A higher average age of employees can mean higher base premiums.
- The number of employees: Insurance companies require a minimum number of employees to provide group insurance coverage. The more employees you have, the greater your purchasing power and the more concessions (e.g., lower premiums, better benefits, etc.) you may be able to get from your insurance provider.
- The health and lifestyle of your employees: The more employees engage in hazardous activities (such as smoking and extreme sports), the higher your premiums. The general state of your employees’ health will also affect your premium payments and inclusions.
You can bear the full cost of insuring your employees, or you can split the cost with them. Business organisations can provide basic life insurance for free, say one that pays a benefit of up to twice their annual salary. Employees can pay extra premiums out of pocket or via a salary deduction for a higher payout.
Likewise, companies often provide medical coverage for free. Employees who want more benefits or coverage for family members can get them by paying additional premiums.
Factors to Consider
Ideally, you want to maximise the benefits and minimise the costs when obtaining life and medical insurance for your employees.
Consider the following when deciding on and crafting your group insurance plan:
1. Budget
How much can you spend? Decide on your insurance budget, and consider the financial impact on the company and the level of coverage you can afford.
It may be better to let your employees decide on the coverage they want. Provide basic coverage, and then employees can pay extra for upgraded benefits.
2. Employee Needs
Analyse your workforce composition, considering age, health status, marital status, family sizes, etc. This will help you determine what type of policy would suit most of your employees.
Your human resource department can also ask your employees to answer a questionnaire that will tell you about their insurance needs. This will help you understand your employees’ preferences and expectations regarding company life and medical insurance benefits.
3. Policy Terms, Inclusions and Benefits
When choosing a group policy for your company, consider what and how much coverage it provides. Look for a policy that includes as many benefits as possible for the least premium payments.
You also want a plan that offers flexibility in terms of policy amounts, term lengths and optional riders (like accidental death or disability cover inclusions). Customisable plans can better fit the diverse needs of your employees.
Group Life Insurance
Group life insurance plans are usually term insurance policies. As mentioned earlier, they often pay a death benefit that is a multiple of an employee’s annual salary.
Group life insurance plans can vary according to their terms of coverage. Natural and accidental death coverage are a given. However, some employee life insurance plans provide more than basic benefits. You can enhance your employee life insurance plan by getting one that covers:
- Death due to critical illness
- Disability due to sickness
- Disability due to an accident
- Loss of income
- Body repatriation
That said, it’s essential to strike a balance between comprehensive coverage and affordability. The best option would be to make comprehensive coverage available to employees (if they want it) for an extra fee.
Group Medical Insurance
Group medical insurance plans usually provide tiered benefits differentiated by their maximum benefit limits, item/procedural limits and benefit inclusions. The higher tiers may be available by default to employees with higher salaries, but you can make them available to everyone in the company willing to pay extra premiums.
Employee medical insurance plans can cover the following:
- Outpatient consultations
- Diagnostic procedures
- Medication
- Vitamins
- Hospitalisation
- Professional fees (physicians, surgeons and anaesthesiologists)
- Caregivers or nurses
- Hospice care
- Rehabilitation
- Counselling and therapy
- Medical repatriation through private jet chartering
- Medical reimbursement
- Dental care
- Eyecare
- Annual physical checkups
4. Screening Procedures
Life insurance plans require health screening. Ask your insurance account manager about their medical screening procedures. Some providers provide door-to-door screening services.
5. Eligibility Requirements
Employee life insurance plans are usually more flexible than individual plans. That said, insurers still have eligibility requirements, such as age limits and health status restrictions. Some plans cover pre-existing conditions. You want a plan that covers all or at least most of your employees.
On your part, you may want to limit coverage to full-time employees. You may also set a waiting period before adding an employee to your company’s group insurance plan.
6. Cost and Premium Structure
Assess the cost of the plan relative to the benefits provided. Consider how premiums are computed. Do the premiums change (or increase) with age, or do they remain the same throughout the life of the policy?
7. Provider Reputation and Financial Stability
Choose an insurance provider based on its track record, claim settlement ratio and financial stability. A provider with a strong reputation and solid financial footing is reliable and will give you peace of mind.
8. Ease of Administration
Assess how easy it will be to administer your insurance plans. Can your employees manage their policies themselves? Look for providers that offer user-friendly platforms for enrollment, payment and claim processing.
Getting Group Insurance for Employees
Employee life and medical insurance can boost employee retention and make your company more attractive to potential employees.
Insurance can be a significant expense, however, so you do have to consider various factors before you commit to an insurance plan.
