Why uninsured employees are bad for business

Many businesses expect their employees to secure their own insurance, but many employees don't. When you provide insurance for your employees, not only are you safeguarding their financial futures in case tragedy strikes, but you're also protecting your business.

Entrepreneurship requires courage and involves both dreams and risks. Cash flow is crucial and often limited as business owners face the challenges of expenses and growth. Unlike larger corporate businesses, entrepreneurs and SME owners do not have the financial cushioning to rely on.

That said, have you ever thought about what would happen if one of your staff members were suddenly unable to provide for their families due to death or disability? Would their family be left in financial hardship? Would you as a business owner feel obligated to contribute towards funeral costs and offer support to the family?

If so, you should consider a group life policy, as the financial and emotional burden on the business can be significant. Group cover is generally more affordable than individual cover. In many cases, employees can even cancel their individual coverage and save a significant amount of money.

Recognising the need and opportunity, our business, Simply Financial Services, has recently introduced an online Group Cover product. Here are the top five questions asked by business owners when considering employee benefits:

1. Why is group life cover better for my employees than individual options?

Group life insurance offers several benefits for individuals. First, since the employer pays the premium, coverage is typically more consistent, providing better protection for dependents. Second, the cost of group cover is often lower than individual coverage for the same benefits. Third, individuals with health issues may receive better coverage. Finally, waiting periods for coverage are often waived or shortened. We believe that investing in good value group cover is beneficial for a company.

2. Is group life cover affordable?

Group life cover starts at very affordable levels. Meaningful coverage can be obtained for approximately R49 per employee per month. Additionally, there are ways to structure premium payments as part of your employees' total remuneration package. For example, you can have the employee contribute, with the business matching the contribution.

Affordability is important to SME owners and entrepreneurs. Costs need to be balanced against benefits, including increased loyalty and job satisfaction from employees, as well as the potential cost to the business if a key staff member becomes disabled or dies.

3. What does group life cover typically include?

Coverage varies among providers, ranging from simple funeral policies to complex death and disability coverage. Coverage can be based on a multiple of annual salary or a fixed amount for both life and disability, as well as a fixed amount for family funerals. When selecting a product, consider the following:

- What benefits are included in the cover? Look for a product that provides good value protection products such as life, disability, and family funeral coverage to cater to a wide range of scenarios.

- Free cover limits: Is there a guaranteed amount of cover (the 'free cover limit') that provides full coverage for death and disability?

- Waiting period: How long must you wait from policy inception before employees receive full cover instead of accidental-only cover?

- How does the price compare to other options, both group and individual, and how are premiums expected to change over time?

4. What should I look out for in the policy's fine print?

It is crucial to review the policy's fine print to avoid any unpleasant surprises when making a claim. Many providers have complex policy rules and documents, and SMEs often discover the details too late. A good indicator is to assess how simple and transparent the sign-up process is, as well as how user-friendly the policy documents are.

5. How do I choose the right provider?

Ensure that your insurance provider has a reliable track record and is underwritten by a recognised insurance provider. There are many unreliable providers in the market, and it is essential to have the backing of established and reputable players. You need to be confident that your insurer will honour claims when the time comes.

6. How do I purchase and manage the policy?

Traditionally, brokers have sold group life policies and provided administrative support to clients. However, due to limited commissions and the involved nature of the work, brokers have not typically been available to SMEs. Consequently, there are a large number of SMEs without group life cover, putting their employees at risk. Fortunately, there are now options available that allow SMEs to purchase coverage online and for brokers to serve SMEs cost-effectively.

You can decide whether you prefer the peace of mind of working with a broker or the speed, control, and convenience of purchasing cover online.

In conclusion, we believe that group life insurance offers significant value and peace of mind for SMEs. While many South Africans have funeral cover, few have life or disability cover. As an SME owner or manager, you can demonstrate your care by providing a policy for your employees. Not only will you likely save money compared to individual retail products, but you will also be amazed at how much your employees appreciate your concern and generosity. You'll be able to rest easy, knowing their families will be taken care of if they die or become disabled.

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