Increasingly, employers are including protection as part of a total remuneration package, to attract and retain key employees. Group Risk Cover is a very cost effective way of protecting your business’ most important asset – your employees. It provides real financial benefits to both your business and its employees.
At Hennelly Finance we have the experience and expertise to deliver a Group Risk solution tailored to each employer’s individual needs.
Group risk benefits such as group life insurance (death-in-service benefit), group income protection (also known as permanent health insurance or PHI) and group critical illness are the backbone of many staff benefits packages in Ireland.
They are primarily used to rehabilitate employees who are (or could be) off work on long term sickness absence due to stress, an accident or other illness. They also insure employees in the event of long-term illness or death
Group Permanent Health Insurance
This type of Insurance pays out regular income to the insured upon becoming disabled through sickness or accident and therefore unable to continue work. With the exception of a small number of exclusions payment will be made regardless of the event. (The cover is not illness specific like critical illness cover).
PHI is vital in particular for the self-employed and can be used to replace up to 75% of net profits or salary (employees) in the event of ill-health. PHI is also useful as a scheme for employers who do not wish to take the responsibility of continuing payment of salary to employees suffering from long-term disability.
- The premium is fully tax relievable against income tax subject to an overall limit of 10% of income. This substantially reduces the cost to Irish tax residents.
- The provision of a substantial income which can also escalate in payment whilst disabled.
- Once the risk is accepted by the insurer it cannot be withdrawn provided premiums continue to be paid.
- Income payments will continue until age 60 or 65, or earlier recovery.
Group Life Assurance (Death In Service)
Group Life forms the life insurance portion of an employee benefits package. It enables employers to provide a lump sum benefit and an income to an employee’s dependants in the instance that an employee should die prior to normal retirement age. As well as encouraging staff loyalty and demonstrating a genuine care for staff welfare, Group Life insurance goes some way to reassuring employees that their efforts in the workplace really count.
Death In Service Product Features:
Cover is provided in many different forms, but the most common are group life and spouse’s death in service. Group life insurance offers a lump sum benefit and spouse’s death in service offers a dependant’s pension. Both are based on a multiple of the employee’s salary at the date of death.
Within the permissible limits of the product, the employer can choose which level of benefit to provide and to whom the benefit will apply.
In addition to a spouse’s pension, benefits may be provided for surviving children or orphans if the surviving spouse also dies.
Benefits can also be protected against inflation by including an escalation option. This means that any pension payable will increase over time at an agreed rate or in line with the Consumer Price Index.
Death In Service Benefits
- Competitive premium rates
- Premiums are usually allowable as a business expense and enjoy corporate tax relief thus reducing the real cost
- Wide variety of options contained in the plan means that the right plan can easily be constructed
- Generous Free Cover Limits – reducing the need for lengthy medical evidence
- Implementation of the plan enhances employee relations
- Easy administration and flexible underwriting
Death In Service Benefits for Employees
- Provides peace of mind and reassurance
- Premiums paid on an employee’s behalf are not treated as a benefit in kind, so are therefore not subject to income tax
- Any lump sum payable to dependants is not subject to Inheritance Tax
- Temporary absence cover, even up to normal retirement date
Group Critical Illness
Group Critical Illness (*CI) cover pays a lump sum to an employee on the diagnosis of one of a defined list of serious conditions or on undergoing one of a defined list of surgical procedures.
The benefit is paid once the employee has survived for a specified period. Most insurers will also offer the option of a benefit for a covered employee who is assessed as being permanently and totally disabled but not otherwise able to claim for one of the conditions covered by the policy.
Group CI is also increasingly being provided on a purely voluntary basis as part of a flexible benefits arrangement. In this case, the premium the employee pays does not qualify for tax relief