Employee Benefits
What is Group Insurance?
Group insurance is a collective cover that provides insurance benefits to a defined group of people under one master policy. Commonly the employees of a company, but it could also be members of an association or club. Instead of each person buying their own policy, the organisation sets up a group scheme. This way, everyone gets coverage, usually at a lower cost and with simpler acceptance terms than key person cover.
In a workplace setting, group insurance is a valuable employee benefit. Employers can negotiate group policies and either fully fund, partially subsidise, or simply facilitate access for employees, who pay the discounted premium. In all cases, being part of a group plan usually means discounted premiums and sometimes reduced medical underwriting, thanks to the larger risk pool.
Benefits of Group Insurance for Employers and Employees
- Cost Savings: By leveraging group buying power, insurers can offer cheaper premiums per person than individual or shareholder insurance. The larger the group, typically the greater the discount.
- Enhanced Employee Benefits Package: Offering group insurance is an excellent way for employers to boost their benefits package. It’s a non-salary perk that can attract new talent and increase retention.
- Inclusive Coverage: Group schemes often have automatic acceptance up to certain coverage limits. This means employees can get insured without lengthy health questionnaires or blood tests. Importantly, pre-existing medical conditions may be covered if the person joins the scheme when first eligible.
- Better Support & Claims Experience: With a group scheme, each member has the backing of the group policy administration. Employers often assist staff with the onboarding and claims process, sometimes with the help of brokers like Capital Advice. Additionally, combined claims history of the whole group can lead to higher stability over time, as insurers view a large group as less volatile than one individual.
- Productivity and Wellbeing: Knowing they have business insurance cover in place gives employees peace of mind. Health cover in particular can lead to employees getting treatment sooner and returning to work healthier, reducing downtime from illness or injury.
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Common Types of Group Insurance Cover
Group schemes can be tailored to the needs of the group. Some of the most popular types of group insurance in New Zealand include:
- Group Life Insurance: Provides a lump sum to an employee’s family or nominated beneficiaries if the employee passes away. Employers might offer a default cover amount as part of the scheme.
- Group Income Protection (Disability Insurance): Offers a percentage of salary (e.g. 75%) as a monthly income if an employee is unable to work due to illness or injury for an extended period.
- Group Trauma/Critical Illness Insurance: Pays a lump sum to an employee if they’re diagnosed with a serious condition like cancer, heart attack, or stroke. This money can be used for treatment costs or to relieve financial stress during recovery.
- Group Health Insurance (Medical Cover): Gives employees access to private healthcare services, with the insurer covering a large portion of eligible medical and surgical costs.
Employers can choose one or a combination of these covers to offer. Some companies provide a base level of cover to all staff for free and allow them to top up their coverage at their own cost, taking advantage of group rates.
Setting Up a Group Insurance Scheme in NZ
Setting up a group insurance programme is straightforward, especially with the guidance of an experienced business insurance adviser or broker. Here’s how the process generally works:
- Assess Your Needs: We’ll work with you to identify what kind of cover makes sense for your organisation. Factors include the size of your team, industry risks, and what benefits you want to provide.
- Design the Policy: Based on your goals, we approach leading New Zealand insurance providers to design a tailored group policy. This includes choosing coverage amounts, any additional options, waiting periods for income protection, etc. We also negotiate for the best rates and terms, leveraging the anticipated size of your team.
- Implementation: Once the scheme is in place, we help you roll it out to your group. This may involve providing materials, presentations, or sessions so that staff understand the benefits and how to enrol.
- Administration & Support: Capital Advice can assist with the ongoing administration of the group policy. This includes adding new employees, answering questions, and helping with any claims. Our advisory support in managing the scheme is part of our service to you as the broker.
It’s worth noting that insurers may require a minimum number of participants to start a group scheme. For instance, at least 10 employees for life cover. This ensures the risk is spread adequately.
Most small-to-medium businesses can meet these numbers, but if your team is smaller, we can explore alternative solutions, like arranging cover through an industry group or through shareholder protection.
Get Started with Group Insurance
Whether you’re a small business owner looking to provide life insurance for your small team or a larger company aiming to offer a comprehensive benefits package, Capital Advice can help craft the ideal business insurance scheme. We’ll provide the options and handle negotiations with insurers on your behalf.
Our team has experience setting up group schemes for a variety of New Zealand-based organisations to ensure a smooth implementation process and ongoing support.
Ready to boost your employee benefits? Contact Capital Advice today to discuss business insurance solutions for your company.
