February 11, 2022

Employee Benefits Insurance for Small Businesses

Employee Benefits Insurance for Small Businesses

An organisation is only as successful as its employees. They are a business’s greatest asset and form an essential part of the entire ecosystem. It is only natural then that efficient businesses pay as much attention to their workers’ needs as they do to their customers’. And one way of doing this is by offering employee benefits through group insurance schemes.

These insurance programs are highly customizable, come at cheap premiums, and offer collective coverage for a business’s employees. They often form an integral part of the business’s Employee Benefits Programme and are considered indispensable for new hires. Most of them offer tax benefits for the employer and the employees if they also contribute to the premium.

So, with that said, here is a list of some crucial insurance policies that employers can procure for their employees as part of their employee benefits program :

Perhaps the most common Employee Insurance policy, Group Health Insurance is purchased by organisations to provide health coverage to their employees.

It offers benefits like accidental hospitalisation, illness related hospitalisation, critical illness cover, COVID-19 coverage, post hospitalisation lump sum benefit, cashless claims, and much more to a company’s employees. Through this policy, the medical benefits of the employee, their spouse and their children can be covered.

Employees can also benefit from an extensive pre-existing diseases coverage with no waiting period, and in some cases, coverage for ambulance charges as well.

Some policies additionally offer maternity benefits with a newborn baby cover, and also a psychiatric benefit to cover hospitalisation due to mental illness. However, these covers come with rigorous conditions.

Group Health Insurance can greatly influence a potential employee’s decision to join a company. This policy can help safeguard employees’ savings and support them at the time of a medical emergency.

Group Personal Accident (GPA) Insurance, as the name suggests,  protects a business’s employees in the event of bodily injury, disability, or death caused by an accident.

It provides comprehensive coverage for all expenses associated with accidents occurring at the workplace or while performing work duties. Group Personal Accident Insurance also offers  24/7 worldwide coverage, thus protecting employees who are travelling or on holiday as well.

GPA provides benefits such as accidental death cover, children’s education cover, broken bones cover, weekly benefit, and accidental medical expenses reimbursement. It primarily covers an employee if an accident causes :

  • Death
  • Loss of limbs, eyesights, or hearing
  • Partial or total disability

In the event of an employee’s death, 100% of the Sum Insured is paid to the family along with coverage for the repatriation of remains and the cost of last rites.

Workmen’s Compensation Insurance is designed to enable an employer to pay compensation to workers and employees for accidental bodily injuries or disease that lead to their death, permanent or temporary disability, or medical expenses for first aid.

This insurance was introduced in India by the Workmen’s Compensation Act of 1923 which made businesses liable to maintain a safe work environment and reimburse their employees in the event of workplace accidents. In fact, Workmen’s Compensation Insurance has been made compulsory in many countries, including India, for all manufacturing and industrial units, plants, factories, servicing setups, and other businesses.

The scope of this policy has been expanded to cover not just blue-collar workers but all employees. It is now more commonly known as Employee Compensation Insurance. Through this policy, everything from the employee’s medical expenses to their lost wages can be covered.

This is a standard insurance policy for those businesses whose employees are often exposed to risks of injury while working. This includes manufacturing units, hotels, factories, or any other business that requires employees to handle heavy machinery or travel to multiple locations.

Group Term Life Insurance policy is purchased by a business to provide term life insurance policies to a group of employees. Under this policy, if the covered employee dies during the policy term or during their employment tenure, a death benefit is provided to their family in the form of a lump sum pay-out.

Group Term plans come in different forms- some come with uniform coverage for all members of the group, while some only offer ranked covers, and others come with riders such as a critical illness cover, accident benefits, disability benefits, etc.

This insurance can also help an employer offer gratuity to its employees. Moreover, the death benefit provided by this policy is exempted from tax under Section 10(10D).

Group Term Insurance is an excellent addition to a company’s master insurance programme as it automatically covers any new employee hired by the employer. Such a policy is particularly common within professional groups, banks, microfinance institutions and non-banking financial institutions.

Key Person Insurance, or Key Man/Woman Insurance, is a life insurance policy taken by a business on their most important employee.

Some employees such as CXOs, managers, or sales representatives are solely responsible for bringing a large portion of the profits because of their expertise, skill or particular relationship with clients.

If the business were to lose such a key individual due to death or disability, it would result in heavy losses and may even lead to the business shutting down. For this reason, a Key Person Insurance policy is taken to assist in hiring a replacement employee, supplement lost revenue, or even help liquidate assets in the event of closure of business.

It is imperative for businesses today to take care of the mental and physical well-being of their employees. Employee Insurance programmes can offer several advantages including adequate financial support, a motivated workforce, prevention of unnecessary illnesses, reduced stress at work, and increased employee retention.

Learn more: What are the different types of Business Insurance policies available in India?

Opinions, conclusions and statements of intent expressed in this article are that of the author and Verak does not accept liability for the views expressed unless confirmed by an authorized representative of the Company independently of this communication.