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Group Critical Illness: Frequently Asked Questions?

Group Critical Illness: Frequently Asked Questions?

At Hooray Health & Protection we promise to share our knowledge to our clients completely free of charge to help grow our industry.

This is the first in our series of posts on our most commonly asked product questions. We will be starting with Group Critical Illness Insurance as this is currently the product we are receiving the most questions regarding.

Critical Illness insurance for businesses is one of the newest employee benefits on the market with only 3942 schemes in the whole group risk market at the start of 2019, but this doesn’t make it any less important.

Below we have provided the most commonly asked questions about Group Critical Illness and will continue to update this as the requests come through.

What does Group Critical illness cover?

Group Critical Illness insurance provides a company’s employees a financial safety net in the event of a serious illness.

A lump sum cash benefit will be provided to the employee which can be used in any way they see fit to help cover costs such as:

  • medical expenses
  • financial obligations
  • changes required to their property following an accident or illness etc in the event they are diagnosed with a critical illness.

Is Business Critical Illness a Benefit in Kind?

Group Critical Illness cover is usually considered a benefit in kind for employees covered under the policy. Employees will be liable for the tax on the premiums that the employer is paying. It is organised by HMRC who will deduct this from their personal allowance.

What Critical Illnesses are covered?

It completely depends on what insurer you are arranging your employee benefits insurance with. You will usually find most insurers covering Stroke, Cancer, Heart Attack, Coronary Artery Disease, Chronic Lung Disease, Chronic Liver Disease, Kidney Failure, Major Organ Transplant, Blindness, Deafness, Loss of Speech, Coma, Serious Burns, Multiple Sclerosis, Paralysis, Alzheimer’s, Motor Neurone Disease, Parkinson’s, Terminal Illness and Major Trauma.

We must stress each insurer is different but at Hooray Health & Protection we will always try and tailor to your business.

How is Group Critical Illness taxed?

When taking out a critical illness insurance product to cover the employees at your business the main benefit is of course for the employees but business owners should remember one of the main benefits for them is the premiums are usually considered a business expenses which can be claimed against corporation tax for the business.

I have a critical illness policy through my business, are my family also covered?

Some insurers (such as Aviva) will automatically cover children for set amount for a reduced number of child and adult specific conditions. Partners will not usually be covered under a company’s critical illness policy.

If your company has taken the scheme out on a flexible benefits basis though, you may have the option to add your partner for an additional cost.

Unfortunately, these policies will usually only be available to larger companies as several insurers have a minimum of 250 employees to take out these schemes due to the complex administration involved.

Do you pay tax on a Businesses Critical Illness Insurance payouts?

Claim payments are usually tax free with no income tax for employees on the group critical illness insurance payments. If you need to make a claim on your policy always call a protection expert as soon as possible as there may be added value services that can assist with your recovery.

I am quitting my job; can I continue with the critical illness cover if I pay?

When leaving a company there is no continuation option to carry on being covered by the businesses critical illness policy. In this scenario Hooray Health & Protection can look to arrange new cover for you and potentially apply a discount to the first two months premium.

If you have any questions about Group Critical Illness insurance that we haven’t answered, please call us on 01273 222805 or email us at [email protected]

Charlie Cousins

Founder and Director of Hooray Health & Protection, Charlie Cousins has enjoyed a career in the insurance and financial services industry spanning over the last ten years.

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