Many UK employers ignorant about Group Life benefits and payouts

 

New research shows that employers lack knowledge about the inherent benefits of Group Life Assurance (GLA), including the circumstances in which employees would receive a payout.

The research from Group Risk Development*, (GRiD) the industry body for the group risk protection sector showed that:

  • Fifty five per cent of employers do not accurately understand the circumstances in which a GLA policy would pay out – this rises to nearly three quarters (74%) for organisations with over 250 staff.
  • Only 45% of employers correctly understand that GLA pays out a benefit on an employee’s death for any reason, at any time whilst they are in employment with the sponsoring employer – whether or not this is while undertaking activities for the employer.
  • Over a third (36%) of employers wrongly believe that the employee would have to be on company business or at work at the time of death, or die by accident while at work to be eligible for a payout.

Their research also found that 36% of organisations offer GLA to all staff and a further 17 per cent offer GLA to senior or a limited number of staff. These figures rise significantly to 91 per cent of larger organisations (250+ staff) offering GLA to some or all employees, and drop to just 17% for micro SMEs with less than 10 employees.

The reasons for low take-up of GLA

Of those who don’t offer GLA, the main reasons cited were because employers say:

  • There is no demand from staff, or other employee benefits would be preferred (34%)
  • It is considered too expensive to set up and maintain (24%)
  • Government does not promote the need for this or provide any incentive to offer it (13%)

Common misconceptions about GLA

The commonly held view amongst employers and HR decision makers ‘that GLA is expensive’ is a myth that needs dispelling. In fact, GLA typically costs less than half of one per cent of payroll and, like Group Income Protection, policies can also include access to Employee Assistance Programmes, so the individual and their family can benefit from added-value services such as support with bereavement, relationship problems, addiction, childcare, eldercare, debt and legal worries.

Another wrongly held perception about GLA is the view that someone’s family would not receive a pay-out should their loved one take their own life or be killed in a terrorist attack. GLA would pay out under both circumstances and also offers bereavement and other support to those left behind for as long as it is needed.

Katharine Moxham, spokesperson for GRiD said: “This is truly a wake-up call. More needs to be done to help employers understand the all-round benefits of GLA – not only following bereavement but also during other difficult times for a family.”

“Staff may not knock down HR’s door to demand GLA but this is a basic benefit and should form the bedrock of an employee benefits package. It is inexpensive, valued by staff and their families, and enables an employer to position themselves as a caring organisation.”

“We all tend to feel fairly invincible – particularly at a younger working age – and so it’s easy to understand why employees may have a preference for other more immediately tangible benefits. However, last year, group life assurance policies paid out on average £113.5k each to 9,400 families, meaning a substantial number of people were helped to avoid financial hardship after the death of a loved one. These statistics make the possibility of the death of a breadwinner rather more real, and could help employers make a more meaningful connection with their staff when communicating on the subject.”

To discuss your current Group Risk needs and obtain an independent overview you can contact advo’s employee benefits team on jtuffield@advogroup.co.uk.

 

Notes

*The research was undertaken by Opinium on behalf of Group Risk Development (GRiD), amongst 500 HR decision makers in 500 UK businesses, including 100 in companies with more than 250 employees, during November 2017.

The GRiD Research was sponsored by Aviva, Canada Life, The Chartered Insurance Institute, Ellipse, Generali Global, Gen Re, JLT, Kerr Henderson, Legal & General, Medical Expenses Consulting (UK) Ltd, Munich Re, Punter Southall Health & Protection, Quantum Advisory, SCOR, Self Assured Ltd, Swiss Re, Unum, Wingate Benefit Solutions, Xafinity Consulting and Zurich Corporate Risk.

 
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