Levels of financial capability remain stubbornly low across the UK and 27 million working-age people in the UK don’t have a sufficient savings buffer to allow them to cope with a significant income shock. 21 million don’t even have £500 saved to replace a fridge or mend a car and only half of people with families have any life insurance*. Group Risk Development (GRiD) believes this is something that employers should be addressing with their staff.
In keeping with this year’s Financial Capability Week (FinCap Week), organised as part of the Financial Capability Strategy for the UK, which is aiming to get more people talking about money, GRiD suggests that employers should take the initiative and discuss the benefits of employer-sponsored life assurance, income protection and critical illness with their employees.
While many businesses do offer these financial protection products to their people, GRiD believes there are three key issues at stake for those that don’t:
• Organisations may believe they are more expensive than they are.
• They may offer what they believe employees will consider as more desirable, short-termist perks rather than group risk benefits.
• Lastly, some organisations might offer life assurance, income protection and critical illness as a voluntary benefit but not help employees to make an informed decision through good communication in order to understand them.
Katharine Moxham, spokesperson for GRiD says: “Not only are employees potentially missing out on the benefits of key products that can help them meet their financial obligations after extraordinary life-changing events, but they are also not benefitting from the additional features that are built in to many group risk products such as an Employee Assistance Programme, which could help with debt problems. As a result, employers are also missing out on the goodwill associated with being seen to care, giving financial peace of mind and practical help to their staff.
“We would really urge all employers to take a steer from this year’s FinCap Week and discuss group risk with their staff as part of the #TalkMoney initiative – whether they currently have these products as part of their benefits package, or not. We know that once staff are better educated about them, there is both more demand and uptake.”
Costs of Group Risk
Group Risk is far more affordable than many employers realise. It typically costs less than 0.5% of payroll to offer Group Life Assurance to an entire workforce, and less than 1% of payroll to offer Group Income Protection. A small price to pay when compared to the potential return.