Group life insurance may not be a new concept, but there are not many insurers in South Africa who offer products that really work for small businesses. Here at Simply we thought that needed to change, so we created a group insurance product that we felt the market needed. If you're a small business owner yourself, you may be wondering what the differences are between group life insurance and individual life cover. Here are the main differences:
A group life insurance policy is taken out by the employer
Our product is a life insurance combo that includes Life Cover, Occupational Disability Cover, Critical Illness, Income Protection and/or Funeral Cover benefits – and it's been specially designed for small to medium sized businesses (SMEs) in South Africa. Compared to traditional life insurance where the individual signs up as the owner of the policy, group insurance goes under the company's name. This means that you as the employer are the one responsible for physically paying the premiums each month, rather than the individual that's being insured.
It's generally cheaper
Group life cover is typically much cheaper than the cover your staff might take out privately for themselves. There are a variety of reasons for this, most importantly that you're buying the policy "wholesale", so the costs of selling and maintaining the policy are spread across everyone. Because of this cheaper price, you can pass these savings on to your employees, yet still rest easy knowing that they're protected against unknown risks in the future.
Existing health issues
When you sign up for individual life cover, you typically have to complete lengthy questionnaires about yourself, and list all your existing health issues. But with group life insurance, you'll normally be covered automatically, with no medical questions asked. With group life insurance, as long as you have at least five employees, everyone is guaranteed cover regardless of their state of health.
No waiting periods
Waiting periods are often waived or shortened with group cover. So, while most simple individual life insurance products in the market have a 6-month waiting period before they will pay out claims resulting from illness, group cover does away with this. Simply's group insurance cover has no waiting period on life and funeral cover – employees will have full cover from day one.
It's more consistent
Since you, the employer, are paying the premium, rather than the individual employee, the consistency of payments with group insurance cover is typically better. This means that your employees and their dependents are more consistently protected, as payments are less likely to be missed, leading to lapsed cover.
It's linked to your employment
Although it may be stating the obvious, remember that group life insurance cover is linked to an employee's job. So, if that employee leaves your company, their insurance under your group cover policy will stop too. This is unlike an individual life insurance policy, which continues to provide cover no matter where they are employed.
Employees who leave may have the option to take out an individual policy regardless of their state of health at the time. Also, with group insurance, the level of cover is normally chosen by the employer, so individuals can't change their cover as they see fit.
A small price to pay
Businesses will often assume that their employees have taken necessary steps to insure themselves, but in reality many people don't. This creates immense stress for everyone when your staff members experience disability or death, because you as the employer feel obligated to help out financially, which can put huge pressure on your growing business. As a small business owner, opting for group cover means you avoid this financial strain, and at the same time have better workplace benefits to offer, which helps in attracting high quality employees.
Simply Financial Services (Pty) Ltd is a registered financial services provider (FSP 47146). T&Cs online.