'Employee Benefits More Valuable Than Sign-on Cash' – AIG Life
Image by Werner Heiber
Firms looking to solve staff shortages should promote employer benefits that support family health and finances from day one, instead of cash sign-on bonuses that could quickly run out, says UK life insurer AIG.
Several major retailers such as Amazon, Tesco and Asda have recently announced bigger salaries and £1,000 sign on bonuses in a bid to fill the 100,000 shortage of HGV drivers that the Road Haulage Association says the UK currently needs.
But potentially more valuable to the whole family than cash handouts, says AIG Life, are the ‘Day One’ benefits that help families to manage their health and stay in work, or pay some of their living costs if they’re too ill to do so.
Benefits such as 24 hours a day, seven days a week free access to private health and wellbeing services, as well as life insurance, critical illness insurance and income protection, which pays money if you die, have a serious illness or are too ill to work.
“Sign-up cash might entice some people but it’s a short-term benefit,” said Lee Lovett, Managing Director, Group Protection at AIG Life.
“There’s never been a better time for employers to showcase how valuable all the benefits that they offer are, at a time when they might struggling to recruit new talent. There is a better chance of encouraging loyalty if they tell all new – recruits – and existing employees – how you can help with the family’s long-term financial and physical wellbeing, especially if they – or even their kids – fall seriously ill,” he added.
Day one eligible
The financial benefits that someone can immediately receive when they join a new employer can make a huge difference to a family – as AIG Life found last year. Lovett said a handful of the life insurance claims that AIG paid in 2020 were to families of employees who died within their first month of joining a new company. In one case, an employee fell ill on his second day at work and subsequently died.
But covered by his work life insurance scheme, the family received a sum of money worth four times his salary to help them through a difficult time.
The average age of employees who died and led to a life insurance claim was 53 in 2020, according to AIG. And in a year when much of our focus was on COVID-19, the leading cause of claim was in fact cancer.
More worryingly and what families may not be thinking about, says Lovett, the age they can be when they suffer a serious illness, such as cancer, heart attack or stroke. The average age of people receiving an AIG critical illness insurance payout in 2020 was 47 – 19 years less than the State retirement age of 66.
“Serious illnesses like cancer are a worry and they can have a lasting impact on your health as well as affect your ability to earn for a long time to come,” said Lovett. “And our claims statistics also show that this is the number one cause of claims across life insurance, income protection and critical illness products.
“50% of employees will get cancer in their lifetime1. And that impacts companies too. The benefits that companies offer can help people recover and get back to work. So showing you care and providing access to critical illness insurance tells employees that you want to help them manage their health and money for many years to come.”
So what are the benefits that employees can get?
There are three types of insurance you can access through your employer.
Group life insurance, often known as death in service, is bought and paid for by the employer and pays a sum of money to the employee’s family if they die. It typically pays two or four times a person’s salary, depending on how much insurance the employer agreed to. A common misconception is that employer-provided life insurance is only paid if a person dies while they are working. That simply isn’t true – with most employers it pays from day one of joining and regardless of when they die, as long as they are employed by the company or organisation.
Group income protection pays a benefit monthly through the employer to replace some of the income they lose if they are sick and off work for a length of time. It also provides people with access to private rehabilitation services so they can get help to recover and likely get back to work sooner.
Group critical illness is insurance that pays a lump sum if you suffer or are diagnosed with a serious illness, for example cancer, heart disease, stroke or dementia. It’s available through an employer though is typically offered as part of what is known as ‘flexible benefits’ – perks that you choose but may have to pay for yourself.
These long-term benefits usually come, as part of the package, with free access to health and wellbeing services that can help solve minor health issues today or offer support with serious illnesses later in life.
Telehealth service Smart Health by AIG, for example, provides 24/7 access to a phone or video GP, mental health consultations, nutrition and fitness plans, an online health check or a global second medical opinion if you want advice about an existing illness or treatment.
Smart Health is clearly seen as valuable to customers and insured employees as its six services has been used over 25,000 times2, and consumers say they would be willing to pay £43 per month if they were to buy it separately3.
Employers don’t always pick up the tab on all employee benefits, but there is a cost saving to employees if they buy critical illness, for example, through their employer than if they were to buy it as an individual.
“Flexible benefits schemes are an attractive way for employees to get some critical illness insurance because the risk is pooled and there’s typically no underwriting for the insured employee,” added Lovett. “What many people might not realise is that their children would be insured too. It’s not something we like to think about, but if our kids get seriously ill, a critical illness insurance payout can help ease the financial strain while they go through treatment and recover.”