If you’re looking into group life insurance schemes for your company, chances are you’re in for a shock.
Quotes for the same product can vary enormously from provider to provider.
In fact, we recently contacted four of the largest insurance providers on behalf of a client with 250 employees, and were given quotes ranging from €40,000 to a staggering €80,000!
So how do you make sure that you’re not paying way over the odds?
As a starting point, there’s the question of how generous you, as the company, can afford to be.
Broadly speaking, there are two types of life cover that you can opt to provide to your employees: death-in-service cover and disability cover.
At the name suggests, death-in-service cover means that, if an employee dies, their next-of-kin receives financial support after their death. This takes the form of a single lump sum.
Disability cover, on the other hand, tends to be far more expensive.
This provides ongoing, regular income to an employee after a deferred period of time (usually 13-26 weeks), if they are rendered unable to work by a disability. Typically, payments are a set percentage of the employee’s salary, for example 75% or 66.67%, minus the State Illness Benefit – currently €188 for a single person.
Whether you choose to offer both types of cover is up to you; many companies only provide the former.
Then, there’s how generous you want the insurer to be.
Like any form of insurance, the higher the level of cover, the higher the cost.
The amount you spend on Death-in-service cover will vary according to how much your employees are paid and how much their families are set to receive if they die.
Typically, the size of the lump sum that a person’s next-of-kin receives is worked out as a multiple of the deceased employee’s pre-tax, basic salary. Depending on the policy, this could be anything from twice to twelve times the amount the employee earns – and the cost of the scheme will reflect that.
While you may want to reward longer-term or higher seniority employees with higher levels of cover, it’s worth asking yourself whether this is really a make or break issue for new starters.
Of course, life insurance is an attractive perk and many people like to tick it off the list when checking which benefits their prospective employer offers. However, there’s little evidence that talented applicants choose one company over another based on the actual size of their life insurance policy.
Is it really worth paying big bucks in order to make yourself mega-competitive in this area?
Other key considerations to bear in mind are the occupations of your employees and their age profiles.
Unsurprisingly, a manual-based older workforce push up your premiums.
While you can’t change these factors, paying close attention to the finer differences between suppliers’ policies can make a big difference to the final bill.
For example, if most of your workforce is young, a handful of more expensive premiums will have a negligible effect on the total, but if your workforce skews the other way, it can add thousands to your scheme. Make sure you shop around for policies that best serve the demographic of your company!
Trawling though this information can be a confusing experience.
The most reliable way to ensure that you’re getting the best deal is to work with a trusted advisor that knows the industry and can navigate this for you. They know exactly how to reduce life insurance costs.
It’s tempting to try and save money by doing it all yourself, but when prices vary so widely, scrimping on support and splashing on a sub-standard scheme is often a false economy.
Even SMEs and smaller companies can save thousands by choosing their policy carefully – and typically, that means shelling out on some expert advice.
It’s essential that the advisor you choose is 100% independent, has good inroads with the major insurance companies and is an excellent negotiator. You need someone who’s willing to do the hard graft needed to bring down the costs!
Do you have any tips or tricks for bringing down the overall costs of your group life insurance? Let us know in the comments section below!