If you’re looking to arrange group insurance for a small business, the process usually comes down to three things: deciding who you want to cover, working out what you want the insurance to achieve (choosing the right combination of products such as health insurance, life insurance and income protection) and finding a level of cover that fits your budget.
From there, a broker can help you compare the market, understand the differences between the available options and put the right arrangements in place.
It often sounds more complicated than it is.
A lot of small business owners assume group insurance is something reserved for larger companies with sizeable HR teams and equally sizeable benefits budgets. It isn’t. There are schemes designed specifically for smaller businesses, sometimes covering teams of only a few employees.
The important thing is choosing cover that suits your business, rather than simply picking a package because it sounds comprehensive.
Start With What You’re Trying to Protect
Before looking at quotes, it’s worth taking a step back and thinking about what you actually want the insurance to do.
Perhaps you’re concerned about the impact a long-term absence could have on a small team. You might want to offer better access to healthcare, strengthen your current benefits package, or provide financial protection for employees and their families.
For some businesses, the priority is protecting the company itself. What would happen if a director, shareholder or key employee died or became seriously ill? Would the business have enough money to manage the disruption, repay borrowing or purchase a shareholder’s interest?
These are very different concerns, so they do not necessarily call for the same type of cover.
There isn’t a standard group insurance package that works for every small business. The right arrangement will depend on your workforce, your priorities and what you can realistically afford.
What Types of Cover do Small Businesses Choose?
For most small businesses, the cover options fall into a few main categories.
Group health insurance is often one of the first employee benefits employers consider.
Depending on the policy, it can give employees access to private consultations, tests and eligible treatment. For a small team, where one person being absent can place extra pressure on everyone else, access to timely healthcare can be particularly valuable.
The level of cover can usually be adjusted through choices such as the hospital list, policy excess and included benefits. This means it may be possible to build something around the business’s budget rather than choosing an all-or-nothing package.
Group life insurance, commonly known as death-in-service cover, pays a lump sum if an insured employee dies while covered by the scheme.
It provides financial support for the employee’s family and is generally a straightforward benefit for employees to understand. The amount paid is often based on a multiple of salary, although different structures may be available.
Group income protection can provide an ongoing income if an employee is unable to work for an extended period because of illness or injury.
Policies may also include services designed to support both the employee during an absence. The waiting period, payment amount and length of cover will depend on the policy selected, so it is important to understand how the scheme would work in practice.
Health cash plans and company dental insurance can sometimes be overlooked, but they are often among the benefits employees use and notice most.
A health cash plan allows employees to claim money back towards certain everyday healthcare costs, which may include dental treatment, eye tests and physiotherapy. Dental insurance focuses more specifically on eligible dental expenses.
They can be a practical starting point for businesses that want to introduce a healthcare benefit without committing to a full private medical insurance scheme.
Business protection is slightly different because it is there to protect the company rather than provide an employee benefit.
This can include:
- Key person protection, which can help the business manage the financial impact of losing someone it relies heavily upon.
- Shareholder or partnership protection, which can provide funds to help the remaining owners purchase shares of somebody who dies or becomes critically ill.
- Business loan protection, which can help repay eligible business borrowing if a key person or guarantor dies or becomes seriously ill.
For an owner-managed business, these arrangements can be every bit as important as the benefits offered to employees.
How Does Underwriting Work?
One thing that can cause confusion is underwriting.
Business owners sometimes assume that every employee will need to go through the same medical assessment they might face when arranging an individual insurance policy. Group schemes do not always work that way.
For group life insurance and income protection, employees may be covered up to a certain benefit level without needing to provide individual medical information. If the cover exceeds that level, the insurer may ask for further details.
Private medical insurance has its own underwriting options, particularly when it comes to how pre-existing medical conditions are treated.
The process will depend on the insurer, the product and the size of the scheme, which is why it is important to understand the terms rather than focusing only on the monthly premium.
For individual or business protection policies, factors such as age, occupation, health history and BMI may also influence the insurer’s decision. We have explained this in more detail in our guide to whether BMI affects life insurance.
What does Group Insurance Cost?
This is usually the next question, and understandably so.
The honest answer is that it depends.
The cost can be affected by the number and ages of the employees, the type of insurance, the level of benefit, the location of the workforce and any excesses or waiting periods selected.
A basic health cash plan will normally cost less than comprehensive private medical insurance, but it provides a different type of cover. Likewise, a group life scheme may be relatively inexpensive compared with some other benefits, depending on the workforce and benefit level.
The main thing is not to rule something out before you have explored the options.
We regularly speak to employers who assume a particular benefit will be outside their budget, only to find that the policy can be structured in a more manageable way. Equally, it is important not to strip back the cover so far that it no longer does what you wanted it to do in the first place.
Why use a Broker?
You can approach insurers directly, but comparing group insurance policies is not always as simple as placing the prices next to each other.
Two policies may look similar on the surface while offering very different underwriting terms, exclusions, benefit limits, hospital access or additional services.
A broker can help you work through those differences, identify the options that are suitable for a business of your size and explain what you are actually paying for.
They can also help with setting up the scheme, communicating it to employees and reviewing it as the business grows or changes.
This is the sort of work we do every day at Santé Group. We help small and medium-sized businesses put together employee benefits and business protection arrangements that reflect their workforce, priorities and budget.
We don’t start with a standard package and try to make the business fit around it. We start with a conversation about what matters to you and what you need the cover to achieve.
Getting started
Putting group insurance in place does not need to become a drawn-out project.
Start by thinking about who you want to cover, what risks you are most concerned about and what budget you have available. Once those points are clear, the market can be compared and the options narrowed down.
Whether you are introducing benefits for the first time or reviewing cover that has been in place for several years, a proper conversation is usually the best place to begin.
