How employee protection benefits can support workplace well-being

Protection insurance provides financial support in certain circumstances, such as ill health, redundancy, or death. Individuals can buy personal protection insurance, and your business can also invest in group policies to offer financial protection to your team.

Personal protection policies include life coverage, income protection and critical illness insurance. Individuals can also buy accident, sickness and redundancy policies, mortgage protection insurance or coverage for specific purchases, such as car loans. Insurers don't usually offer these policies on a group basis.

We've mentioned some of the personal protection insurance your employees can buy. There are three main insurance policies your business can invest in to provide financial benefits to your team.

Death in service benefits

Death in service benefits pay an employee's chosen beneficiaries a lump sum, equivalent to a multiple of their salary, if they die while employed by you, even if their death isn't work-related.

Life insurance provides financial security to an employee's loved ones when they're gone. It also gives your team peace of mind knowing that their family will have a financial safety net if they're no longer around.

Enhanced sick pay

Group income protection insurance lets your business pay sick pay over and above what statutory sick pay provides without your company having to cover the full cost. It pays a percentage of an employee's salary, typically for up to two years of absence and means they can rest and recover without rushing back to work because they're worried about paying their bills. This gives employees time to recover from physical health issues and has clear mental health benefits.

You can tailor your group income protection policy to suit your needs and budget.

Critical illness insurance

Critical illness insurance pays a fixed sum if an employee is diagnosed with a serious illness listed in the policy. Policies will pay out whether the condition is treatable or not as long as it's covered. Employees can, therefore, use the lump sum to help with additional expenses, medical care or anything else that would benefit their physical and mental health.

Some life insurance policies offer critical illness coverage as an optional extra, but you can also buy it as a separate group policy.

Providing employee benefits that offer personal financial protection supports employee well-being and mental health, and has many business advantages. Here are a few ways that providing employee protection benefits can benefit your business.

Enhanced benefits at a reduced cost

Statutory sick pay (SSP) pays employees £118.75 per week for up to 28 weeks if they can't work due to illness. This likely represents a significant drop in income for many employees, which can lead to financial stress and a reduced quality of life. Enhanced sick pay helps reduce stress levels for employees, but could significantly increase costs if your business pays an absent employee's wages.

Income protection insurance pays a percentage of your employee's usual salary while they're away and can continue paying for up to two years. The premiums are significantly lower than the full cost of paying an employee's salary, meaning you can save money or have funds available to hire temporary help if needed.

Increased productivity and employee engagement

Providing your employees with a financial safety net lets them take care of their family and other commitments, demonstrating your commitment to their well-being. When your team members feel supported, they're more likely to have high employee engagement and productivity levels.

They're also more likely to look after their colleagues and provide customers with excellent service, supporting business growth and strong workplace relationships. Research suggests that good workplace relationships help reduce work-related stress and improve staff retention, morale, and productivity, even if your team works remotely. Employees are also more likely to recommend your business as a great workplace, which could assist recruitment.

Improved employee morale

We've mentioned that providing your team with financial employee benefits can give you a more highly engaged workforce with good colleague relationships and excellent morale. Enhanced sick pay and benefits that pay a lump sum if an employee dies or becomes seriously ill provide peace of mind. Employees can be confident that their loved ones will be provided for financially should the worst happen. The security that protection insurance offers is particularly important to employees with families or other dependents. It can also have a positive impact on employee morale, as your team members feel supported.

Recruiting skilled staff

Happy employees are more likely to recommend you to job seekers in their network, meaning they act as ambassadors for your company. That can be great for your brand reputation and for attracting new talent to your team.

Including good-quality protection insurance in your employee benefits shows that your business takes employee well-being seriously. Staff drinks are great for a temporary morale boost or to celebrate the end of a significant project. However, life insurance and other financial benefits are attractive to employees with families or who are planning for the future, as they provide tangible support, meaning you're more likely to attract serious professionals seeking a long-term commitment.

Employee retention

When staff feel that their employer cares for them beyond their ability to produce high-quality work, their loyalty increases, and they are more likely to stay with your company in the long term. Your employees may have already bought, or considered buying, life insurance or other personal protection coverage, but are limited in what they can afford. Knowing their employer has covered the cost for them and provides other financial and well-being benefits makes them feel valued.

A well-thought-out employee benefits package motivates your staff to stay with you, meaning they're less likely to see new opportunities elsewhere.

Tax advantages

Investing in insurance to provide protection benefits that promote wellness has financial and tax advantages. Policy premiums are typically allowable expenses for corporation tax purposes, meaning they can reduce your tax bill.

If you add other well-being benefits to your employee benefits package, such as private health insurance, consider the tax implications for your employees. Private health insurance premiums are tax-deductible for your business, but HMRC regard them as a benefit-in-kind, and employees must pay additional income tax on the value of the benefit.

Protection benefits can support employees' physical and mental health, but taking a holistic approach to benefits is wise. For example, protection benefits can offer peace of mind, but employee health insurance offers practical mental health support and private healthcare for physical health issues. Your health insurers can also help you create workplace wellness initiatives, contributing to a supportive work environment and an inclusive culture.

Flexible working helps employees create a better work-life balance and has health benefits, as it helps reduce stress. Some protection policies offer these benefits, depending on your chosen provider.

Reduced financial stress

Employees can experience financial stress for many reasons, whether struggling to make ends meet thanks to the cost of living crisis or facing a drop in income because they need time off due to illness. Mental health issues are often linked to physical health challenges. This can be because a physical illness causes stress and worry or because a mental health issue has co-existing physical symptoms, such as insomnia or digestive problems.

Employee benefits that offer financial security can reduce stress as your team members know they can keep paying the bills and provide for their families, whatever happens.

Increased morale and job satisfaction

Better employee morale is great for your business, but it also has mental health benefits for your team. Employee benefits that provide financial security show your team that you care about their life outside work and help employees feel valued. In turn, this improves their sense of job satisfaction and gives them a sense of belonging, with all the mental health benefits that come with it.

Rehabilitation support

Many insurance companies provide both employee health insurance and group life insurance, meaning life insurance customers can often access health and well-being benefits. Some group income protection policies also provide access to rehabilitation services, which can aid recovery during an illness.

Even if you already provide your team with private health insurance, additional rehabilitation services can supplement your policy's coverage.

Mental health support

We've mentioned that many insurance providers offer both life and health insurance and the same membership benefits to both sets of customers. It often means that buying life insurance gives your employees access to mental health support. This is typically more limited than the private healthcare they can access via comprehensive health insurance. Depending on your chosen provider, employees can call a mental health helpline for guidance and signposting to other services. Some also offer an Employee Assistance Programme (EAP) with access to counselling sessions and helplines providing legal and financial advice and support.

Aviva's services include a stress helpline and mental health resources for employees and line managers.

Access to health and well-being resources

Health and well-being resources help employees feel empowered to care for their own health, manage their physical and mental health challenges, and live healthier lifestyles. Insurance companies differ in offerings, but most offer access to resources such as articles, videos and health assessment tools.

These resources typically cover physical and mental health, common conditions and guidance on ways to help employees become more physically active. Many also provide resources for employers to increase employee engagement with workplace wellness initiatives and health benefits.

Member discounts and rewards

Most insurers offer member discounts and rewards, which are available to their group life insurance customers. Some offer the same discounts and benefits to all members, while others let employees earn increased rewards by achieving their health and well-being goals.

For example, Vitality's rewards programme includes discounted gym memberships and fitness trackers, plus discounts on other services such as smoking cessation or mindfulness and meditation apps supporting employees' mental health.

Globacare's specialist advisers can help you choose the right insurance policies to provide high-quality employee protection benefits to your team. Contact us for advice tailored to your needs.