Do you have an uninsured liability?

Group risk insurance has the potential to be a high value, low cost benefit for employers to offer to staff. It gives employees access to insured financial protection cover that would otherwise be expensive to obtain for themselves. For example, as an employer you may wish to offer your staff death benefits, long-term sick pay or critical illness cover. You can use a group risk insurance policy to cover your liability for these highly-valued staff benefits.

With the removal of the default retirement age, group risk insurance policies such as group life, group income protection and group critical illness can cease at age 65 or State Pension Age (SPA).  This means that the cover will still be in place as the SPA increases to 66, 67, 68 and beyond.

This legislative change creates a potential problem for employers who have not reviewed their existing schemes and still have fixed cessation ages of 60 and 65.  This can lead to an uninsured liability for the employer if the policy cover runs out for an employee at age 60, while they continue to work for you beyond that age.

It is therefore important that employers review their schemes not only for the SPAs, but also other areas such as:

  • definitions under the policies insurance company terms and premiums
  • suitability of the definitions under the policies
  • are the scheme documents up to date and take account of legislative changes, such as trust deeds?
  • have schemes been reviewed for the changes in the Employment and Support Allowance (ESA) and the Work Related Activity Component (WRAC) state benefits?
  • are the staff communications appropriate and include the caveats needed to reduce any uninsured liability?

A further benefit of carrying out such a review is that employers often achieve significant cost savings as a result.

If you would like further details and how we can help you, please contact Dion Prideaux-Reynolds on 01635 551333.

Latest news

News

05 Apr 2024

Investment market update: March 2024

Read more

News

05 Apr 2024

5 practical tips that could help you set realistic financial goals

Read more