Case study

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Ruth is an HR manager for a brewery in Glasgow that employs 149 people. Having attended a conference on employee benefits, she is now looking to take out some form of staff protection which she hopes will act as an incentive when hiring new employees. The firm's budget is limited. What options are available to her?

Julie Smith, AWD Chase De Vere

The easiest way for Ruth's employer to offer protection benefits to its employees while sticking within a tight budget is to offer a range of fixed benefits.

One option to consider would be to set up a group life scheme. Group life cover is generally considered a core offering as it is seen as a straightforward and cost effective benefit. It provides financial security to employees and their dependants by providing a lump sum benefit should an employee die during service.

Fixed benefits also provide advantages for the employer. If the scheme is offered to all employees, the firm may be able to negotiate a discount with the provider as they will estimate the level of takeup of the contract in advance. Another advantage is that the exact cost is known upfront, allowing greater budgetary control.

If the budget allows, other products (such as critical illness (CI) or private medical insurance) could be added to complement the group life offering. Voluntary benefits are another consideration and can be set up at little cost to the employer while offering a wider range of benefits and incentives to employees.

Before deciding on what benefits to offer, it is a good idea to consult with employees beforehand. A simple survey to get feedback on proposed plans through an employee forum is always a good idea, as well as looking into what competitors offer. This data will prove invaluable for employee retention and future recruitment drives.

Marco Bannerman, head of intermediary sales, Bupa

Assuming nothing is in place already, the first consideration should be to install a group life scheme. For many people, the only life assurance they have is to cover their mortgages and so providing a benefit that helps the families of employees should they die is likely to be valued. The actual cost will vary according to employees' ages and salaries, but cover of twice salary for each member should be in the region of 0.25% of the company's total salary roll - an inexpensive way to provide a substantial benefit.

Rather than group income protection (IP), which could be problematic given the type of occupations likely within the company, an inexpensive option would be to provide a flat group CI benefit of around £20,000 for each member. This amount would be a welcome financial cushion to someone that suffers the trauma of a heart attack, cancer or similar. The cost is probably not much more than for life cover, and the final cost of both benefits for the company would be further reduced by virtue of the premiums being deductible against tax.

Built-in extras can add to the main benefits value for employees. Access to Bupa's 24-hour telephone HealthLine, staffed by trained nurses, is available to members of group life and group CI schemes, while membership of the latter also brings access to Bupa Positive Health, an online service where employees can monitor and improve their health and fitness.

Bob Free, Canada Life

The case study described is a common one. Employee benefits are a proven incentive for attracting and retaining quality employees but they do not have to cost the earth.

The best solution for a limited budget is scheme design. By reducing the multiple or percentage of salary and limiting the payment period, deferred period, or type of incapacity, Ruth could purchase a complete benefits package from Canada Life of group life assurance, IP and group CI for under 2% of the total. This payroll package would consist of a nominal level of cover for each product

The least expensive of these products is group life assurance, which is considered the basic benefit in risk provision.

Group IP is often viewed as an expensive benefit for employers to provide. However, with appropriate product design and flexible scheme options, Canada Life can offer an IP solution to suit all budgets.

The Canada Life product offers added value services including Best Doctors, BusinessCare and its in-house claims management service that are available at no additional cost alongside all its group IP schemes.

Group CI has the lowest penetration of risk products in the UK market. With the seven most commonly diagnosed critical illnesses covered as standard and the ability to extend this to 24, a group CI package is flexible and valued by employees.

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