What types of employee insurance are there?

There are two primary types of employee insurance policies - those that are for the benefit of the employee, and those which are for the benefit of the business. 

Insurance products that are for the benefit of the employee:

  • Employee life insurance
  • Income protection insurance
  • Employee private medical insurance

Insurance products that are for the benefit of the company:

  • Employer’s liability insurance
  • Keyman Insurance
  • Professional indemnity insurance
  • Public liability insurance
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Employee life insurance

Employee life insurance, often called death-in-service benefit, is a type of policy which covers the life of an employee and in the event of their death, pays a lump sum to their loved ones. Depending on the size of your business, you’ll need either Relevant Life Insurance - for companies under five employees, or Group Life Insurance - for companies larger than five employees.

Relevant Life Insurance - typically for companies with less than 5 employees

Relevant Life Insurance was created to provide small businesses with a product that is comparable to Group Life Insurance, which is typically reserved for larger companies only. Relevant Life Insurance is a great way to give employees death-in-service benefit and is also a tax-efficient way for company directors and high paid employees to get life insurance.

Relevant Life Insurance is one of the products that we specialise in at Business Protection Hub, so if you’re interested in how it can benefit you and your employees, please get in touch. 

For further reading about this product be sure to read another of our guides titled How to save money on Relevant Life Insurance.

Group Life Insurance - typically for companies with more than 5 employees

Group Life Insurance provides employees in larger businesses with death-in-service benefit, meaning should they die while employed, their loved ones would receive a cash lump sum. Group Life policies are usually set up to provide a benefit that is a multiple of an employee’s earnings, which effectively means as people progress their careers and grow their earnings, their Group Life benefit grows accordingly. 

In today’s employment market, employers are all competing to attract the best talent, and having a Group Life scheme can sometimes be the difference between securing the individual you want or them choosing a competitor. 

Employee income protection insurance

Employee income protection insurance provides your team with continuing payments in the event that they are unable to work due to illness or injury - how long those payments continue will be determined by the terms of your policy. With the recent pandemic being fresh in people’s minds, this is perhaps the one type of insurance that most businesses should consider above all others, as by having it you provide your team with the reassurance that if they can’t work, they’ll be looked after. Similarly to employee life insurance, there is a small business product called Executive Income Protection Insurance and a larger business alternative called Group Income Protection. 

At Business Protection Hub we have extensive experience of helping businesses of all sizes with their employee income protection policies, so if you have any questions or would like to get an idea of what a policy might cost, please get in touch. 

Executive Income Protection Insurance

Executive Income Protection Insurance is a product designed for small businesses and company directors. It’s a product which is particularly popular among contractors and freelancers who run their own limited company and are looking for some protection should they be unable to work. The great thing about Executive Income Protection is that up to 80% of your income is covered, which includes both your salary and dividends. 

In another recent guide we’ve explained exactly how contractors in particular can benefit from this type of protection.

Group Income Protection

Group income Protection insurance is simply employee income protection for a larger number of people. With the government’s statutory sick pay and people’s savings often falling well short of what people need to survive, Group Income Protection provides you and your team with some much needed reassurance that, should they be unable to work due to illness or injury, they’ll still get a reasonable income.

We’ll soon be writing another guide which focuses purely on Group Income Protection, so please keep an eye out on our social media for that, or contact us if you have questions and would like to speak to a specialist. 

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Employee private medical insurance

Private medical insurance gives you and your employees access to private healthcare services in the UK. With the NHS particularly overburdened due to Covid-19 and there being an unprecedented backlog of patients waiting for treatment, there has perhaps never been a more important time to invest in private health insurance. 

By providing your employees with this benefit, you ensure that, should they become unwell, they will receive prompt treatment and be back to work as soon as possible. Private health insurance is also viewed as an extremely attractive benefit to prospective employees, and again, providing it can really make your company stand out from the crowd of employers.

Which employee benefits are right for your business?

The types of policy that you want to provide to your employees or that they would most value, will vary significantly from company to company. We’d always recommend speaking with your employees to find out what their own worries, concerns and priorities are. You may be surprised to learn that many of them would favour a certain type of protection that you hadn’t considered. 

For more information about any of the above policies, please feel free to contact us and we’ll be happy to help.

Policies which protect the business

So we’ve covered the core products that businesses consider which are primarily for the benefit of the employee, now let’s look at those which benefit and protect the company itself.

Employer’s liability insurance

Employer’s Liability Insurance is the only product on this list which is actually required by law. You are required to get Employer’s liability insurance as soon as you become an employer. It must come from an authorised insurer and cover you for a minimum of £5m, so if you’re here and you have employees and you don’t have a policy, you need to get one as soon as you can.

Employer’s liability insurance is there to cover the cost of compensation, legal fees etc., should an employee be injured or become unwell due to something work related. With many of us spending most of our adult lives at work, it should go without saying that even in a low-risk environment like an office, there is a reasonable chance that an accident could happen. If it does, you need insurance to cover the potential costs.

To reiterate, it is a legal obligation that you have Employer’s liability insurance, and you can be fined £2,500 for every day that you aren’t properly insured. If you don’t have it, get it immediately! Contact us now so we can arrange the best deal for you.

Keyman Insurance

Moving on, the next type of employee insurance which is of primary benefit to the business, not the employee is Keyman Insurance. This increasingly popular type of business protection is effectively life insurance for an employee, but rather than the benefit being paid to the family in the event of the employee’s death, it’s paid to the company instead. 

Keyman Insurance is often taken out to cover the life of one or more individuals whose death would cause significant financial hardship to the company, such as a loss of revenue via sales, a loss of relationships, or indeed a loss of knowledge which needs replacing. Keyman Insurance is designed to cover any of these eventualities, so that should the worst happen, the business won’t be completely debilitated by it.

Like many of the other products mentioned in this article, we specialise in Keyman Insurance and our 5* rated advisers are on hand to offer you personalised advice; best of all, we don’t charge you anything, and by using us, you’ll gain access to the best prices available. 

Professional Indemnity Insurance

Professional Indemnity Insurance is another type of protection which covers you from mishaps you or your employees have at work. Unlike Employer’s Liability Insurance, Professional Indemnity Cover isn’t a legal requirement, although it is something that most business advisers will strongly recommend you take out.

Public Liability Insurance

Public Liability Insurance  is a type of protection which is there to cover the cost of compensation and legal fees resulting from an accident or injury to a member of the public and/or damage to their property. If you have clients on site or you work on your customers' sites on a regular basis, or indeed come into contact with the public frequently, this type of insurance is pretty much essential. 

What’s next?

So we’ve hopefully given you the information you need to start thinking about the types of insurance you need as a business and for your employees, but what should you do next? The simple answer is to contact us - we’ll  be more than happy to start talking about your specific requirements and providing you with tailored advice about the types of business protection insurance policies which will most benefit your company.