Health and protection insurance is particularly prized by employees and invaluable to small business owners, who cannot afford to lose their income due to ill health – however it can be a bit of a minefield when you don’t know what is best.
Hooray Health and Protection explain some of the main types of health and protection insurance that SME business owners are likely to encounter:
Income Protection Insurance
Income Protection Insurance is an insurance policy that pays a benefit to policyholders who are unable to work due to illness or accident. However, the extent of cover varies widely, some policies will cover you if you cannot do your existing job, whereas others will only come into force if you are unable to work at all, such as a construction worker who is only able to do light duties and therefore cannot work in construction.
If you are employed, rather than self-employed, it is often possible to obtain redundancy insurance, although again, policies and coverage varies widely, and with this type of policy there are often terms and conditions, such as no claims within the first few months of cover. These policies are obviously not suited to self-employed business owners.
Key Worker Insurance
As a business, you are often reliant on the skills of your employees – but what would happen if your key staff were to become ill, disabled or sadly, to pass away?
Key worker insurance would offer both life cover and critical illness cover, and in either event, the business will receive a payment to ensure financial stability for the business, enabling you to recruit and train a new employee. These policies often also have optional income protection, which would protect the business from any lost revenue as a result of losing a key employee due to death, illness or incapacity.
Health Cash Plans
Health Cash Plans are great because they enable an employer to offer some form of healthcare benefit to their employees at relatively low cost, with some policies costing less than £10 per person, per month. They also provide some assistance for healthcare – it isn’t the same as private medical insurance (PMI) in that they usually offer cashback if an employee chooses private treatment to, for example, jump NHS waiting lists and see a specialist earlier. In some cases, this will cover the whole cost of the consultation – however there will be strict limits on treatment and often the payment will need to be paid up front and claimed back.
Often these plans are quite flexible and include extra benefits such as telephone GP access (which also means employees won’t need to leave work to speak to a doctor for minor conditions), dental expenses cover, help with physio and so on.
These plans offer great value for money, however the downside is that in the event an employee becomes really sick, the funding for appointments often won’t cover the full course of treatment and therefore would not necessarily provide the business security many employers need.
Private Medical Insurance (PMI)
While there are solutions for private GPs, often primary care will continue to be via the patient’s GP, but PMI is a full healthcare solution that covers the cost of private healthcare for new conditions. The level of cover, and the selection of hospitals and consultants will vary dependent on which policy you choose. One main concern can be geography, for example if you are in a remote area, you will want to make sure you don’t have to travel too far to access private treatment.
Policies can also be adjusted to include/exclude specialist consultations, situations where the NHS can offer treatment within a certain timeframe and so on, often with significant policy fee reductions.
As with cash plans, PMI also often includes useful add-on benefits.
Which insurance is right for me and my business?
There is no ‘one fits all’ policy and we always advice business owners to take advice from a financial advisor before making a decision – they will be able to discuss your budget, your needs and come up with a solution that best fits your situation.
In the UK, individuals and businesses need authorisation from the Financial Conduct Authority (FCA) to advise on, arrange or sell general insurance products, even if it isn’t their core business – it is a well regulated profession and therefore, provided you seek a licensed advisor, you should get reliable advice to your situation. However, if you have any general enquiries, our team are always happy to help.