A win-win for employers and employees

Maintaining and retaining happy employees has become increasingly important to a company’s bottom line. Studies show that happy employees can be up to 20% more productive than those that are discontented. In tough economic times, companies cannot afford to ignore these potential rewards. Assisting employees by providing for a financial safety net therefore not only helps to create financial stability for workers but also builds a thriving organisation.

It’s believed that the benefits go further than just an employee and employer. By offering meaningful employee benefits, companies are helping to build a culture of saving and fostering a financially inclusive society.

Group benefits provide the opportunity for employees, who may previously not have been able to afford cover, the ability to protect themselves and their families. This constitutes a significant step towards attaining socio-economic stability in the country.

According to the World Health Organisation, almost everyone will be permanently or temporarily disabled at some point in their lives. In South Africa, chronic diseases are on the rise, with cancers, lifestyle diseases, like diabetes and heart disease; stress-related conditions and muscular-skeletal conditions amongst the most prevalent.

Without the safeguard of an income protector policy, the disability of a breadwinner could result in financial ruin for the family. Having an income protection policy in the case of disability or a funeral plan in the case of death would relieve the financial stress during these difficult times. A report by the Association for Savings and Investment SA (ASISA) reveals that pay-outs for death, disability or severe illness amounted to R63.7 billion in the year ending June 2018. Furthermore, there was a 21% increase in claims by individuals on employer disability cover schemes.

The report further indicates that there were 5.7 million long term policies purchased over the period, constituting a 12% increase over the previous year.

This is partly due to a tricky economy in which employees are depending on their employer to provide access to adequate protection for themselves and their loved ones should they become disabled, lose their job or even die. Companies with as few as ten employees would be eligible to take out group benefits for their employees. For the employer, this means structuring risk benefits that are diverse and can adapt as the needs of the group changes.

For the employee, group risk cover makes a lot of sense. Not only are there advantages of economies of scale, but risks are also spread across the entire group and there is often little or no underwriting, meaning that employees often are not required to undergo medicals before being covered. In some cases, the company may also subsidise the premiums.

Many insurance companies are working in conjunction with employer groups to customise products to suit their workforce. Current trends in group benefits extend far beyond the traditional health and life insurance, into areas such as funeral cover and ‘living benefits’ where employees can enjoy benefits such as ambulance services, legal services and the like.

Providing benefits that add value to employees increases the value proposition for both employer and employee. For the employee, it means a safety net if things go wrong, and for the employer, it means attracting and retaining talent and building loyalty that will have a positive effect on ROI.

Leroux Delport is the Head of Distribution at African Unity.