Organisations are being encouraged to spring clean their employee benefits packages to check they are still fit for purpose and staff are adequately protected.
Towergate Health & Protection warned that some employee benefits packages are woefully under-reviewed and are therefore not used, valued or effective.
Employees can be left unsupported in times of need and businesses could be vulnerable if benefits are no longer compliant, it added.
The healthcare intermediary said group life assurance is one of the benefits businesses need to have at the top of their list for a spring clean.
High earners can be particularly vulnerable if details haven’t been included correctly when arranging their life assurance cover. Life assurance for such groups is often subject to specialist insurance terms and companies can fall foul if the insurer’s non-medical limit isn’t set high enough for them.
Life assurance will often pay out a multiple of salary, but if the cover amount is above the insurer’s limit and appropriate action isn’t taken, a high earner can find themselves insured for less than the amount promised by their employer.
If this isn’t rectified before a claim is made, the company could be liable to make up the shortfall, which could be hundreds of thousands of pounds.
David Williams, head of group risk for Towergate Health & Protection, said cover must be carefully assessed at least annually – otherwise it could end up costing companies dearly.
Some group life schemes are set up to cover people up to their State Pension Age but companies regularly have employees working past that age.
Towergate said companies need to be clear what benefits their staff remain entitled to and ensure their insurance policies match their HR policies.
When it comes to group income protection, Williams said the most common lost opportunity is when they’re not actively engaged with.
Many schemes are put in place and then forgotten until an employee is long-term absent and a financial claim is needed to support the employee.
Williams said employers and staff could miss out on all the extra benefits they could be using, such as access to mental health support, employee assistance programmes, rehabilitation and access to specialist health advisers.
“Within group income protection there is often a wealth of support to help employees either to stop them going absent, or to help them return to work more quickly. Just looking at the scheme as something to pay out for the long-term absent is missing the point,” added Williams.
Additionally, some group income protection policies still make reference to outdated state incapacity benefits, for instance deducting any state benefits from what they will pay an absent employee.
Williams pointed out that the benefits system has had a huge overhaul and it is now much harder to determine what state benefits an absent employee may be entitled to. Employers can easily miscalculate this, which can be to the detriment of their staff.
“Life assurance and income protection are some of the most valued employee benefits, but their fitness for purpose must be regularly reviewed,” added Williams. “With spring around the corner, now is a good time for employers to air their benefits packages and ensure they’re compliant, add value and are utilised. Doing so can help to safeguard their staff and their business.”