Earlier this month, the government extended its Job Retention ‘furlough’ Scheme. Originally ending in October, the March extension was welcomed by many of the nine million employees who have already made use of the program, but it may have come too late for others.
As the coronavirus pandemic and the UK-wide lockdown made jobs increasingly unstable, redundancy has been a concern across many employment sectors this year.
Foremost in the minds of those made redundant will be the stress of finding a new job. But leaving work, whether through redundancy or retirement, can have unexpected consequences too.
The loss of employee benefits is one area that your clients might not consider. Understanding the protection they had and the cover they have now lost is vital for their financial security.
Redundancy could mean the loss of valuable employee benefits
Many workplaces offer additional employee benefits. From affordable Private Medical Insurance to Death in Service, and Critical Illness cover, your clients must understand the benefits they had, and those they stand to lose.
Employers might choose to offer reduced-cost health insurance, both as a recruitment and retention tool. By reducing workplace absence due to illness, an employer can increase productivity and save money.
Private Medical Insurance packages might include physiotherapy sessions, online health checks, and 24-hour access to a GP, as well as the ability to jump NHS queues and waiting lists.
Your clients might not be able to afford Private Medical Insurance themselves, especially while searching for new employment, but we can help them find alternatives.
Death in Service is a benefit offered by many employers, though there is no legal requirement for them to do so.
An employer pays a lump sum to a nominated beneficiary if your client dies while employed. The lump sum paid is based on the employee’s salary and is usually between two- and four-times their annual pay.
Death in Service is normally free, but it only pays out if an employee dies while employed by the company.
If a client is made redundant or retires, they must understand that a lump sum is no longer payable on their death, and alternative protection – most likely in the form of life insurance – may now be needed instead.
Your clients will need to consider replacing lost benefits
Being made redundant, or leaving employment for any other reason, will mean your client loses their employee benefits. These will need to be replaced:
1. Critical Illness cover
Private Medical Insurance can include things like 24-hour GP access, virtual consultations, and at-home cancer treatment. It might be prohibitively expensive when not offered as part of an employee benefits package.
Critical Illness cover could remove the reliance on a work-based scheme. Policies pay out a one-off lump sum if your client is diagnosed with certain listed conditions, such as a heart attack, stroke, or certain cancers.
These payouts can help cover the cost of bills or ongoing medical expenses and we can help find the right one for your client.
2. Life Insurance
Life Insurance and Death in Service will both pay out in the event of death, but they are different products. It’s worth your client considering life insurance even if they already have a Death in Service benefit. There are three main types of life cover they might consider:
Level Term Assurance is taken out for a set amount of time (the term) and pays out a specified lump sum (the sum assured) if death occurs within that term.
The term might be chosen to coincide with the end of mortgage payments, or a child reaching 18, ensuring that the family home is paid for and a child looked after should the worst happen.
In the same way that Death in Service only remains in place while you are employed by the company, Term Assurance will only pay out during the policy term. Once the term ends, the cover does too.
As the name suggests, Decreasing Term Assurance is a Term Assurance plan where the sum assured reduces over time.
This usually makes these policies cheaper because the longer the policy is held, the less an insurance company will have to pay out on death.
If your client has a reducing debt this type of life assurance might be a good choice. We can take a holistic view of their finances and help decide on the right form of cover for each individual client.
Whole of Life cover guarantees to pay out on death (if all premiums are up to date). This guarantee makes them expensive.
Insurers will agree on a premium amount for a set number of years but once that pre-agreed period ends the plan becomes reviewable. Premiums could increase significantly at this point and your client could pay in more than is paid out on death.
Speaking to us can give your client the peace of mind that they are choosing the best possible cover for them and that they and their family are protected.
Get in touch
Protection is important and can give your clients and their families peace of mind. After a tough year for workers and a continuing lack of job security across many sectors, the threat of redundancy is still very real.
Understanding the benefits and protection that exist as part of an employer benefits package is crucial to understanding where gaps in cover might be. We can help clients to fill these gaps with the products that are right for them.
If you have clients who have recently left employment, might they have lost valuable employee benefits too? If your clients have been left unprotected by redundancy or retirement, please get in touch with us. Email email@example.com or call 0116 2407070.
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