Business owners and employers look to provide attractive, innovative and value-add salary packages to enhance and retain employees. Finance expert Geoff Steer explains how Group Salary Continuance Insurance is an option worth considering.
Known as SCI, Group Salary Continuance Insurance provides Insurance for a group of people generally linked by a common factor, such as an employer, provided a minimum of around 10 people are included in the policy, and that they’re working in a non-hazardous environment.
This product, provided by several market leading insurance brokers, enables monthly income replacement of up to 75 per cent of an employees' package to those persons that are unable to work due to illness or injury for periods longer than the waiting period. The standard policy will pay a benefit for a maximum of two years.
The attraction for employers is offering an added benefit to the employment package at very reasonable premium rates. For employees, the attractiveness of the policy is two years free SCI cover, creating the opportunity for the individual to then seek additional cover beyond the two years with extended waiting periods, hence providing considerable cost savings.
Most providers will cap the level of cover (experience is around $130,000) and underwriters do not need to know any more than the employees date of birth, salary and occupation. That means any employees with pre-existing medical issues are ignored as they are assessed for risk as a group, not individually.
For professional, office style environments it could be the added extra employers can offer as a means of retaining quality team members and reducing the recruitment burden.
For the employer, administration is simple, with annual reconciliations, so no need to add or remove staff as they come and go. If a signed contract is in place, team members are generally covered. Given these benefits, Group Salary Continuance Insurance is worth considering at your next salary package review.
Geoff Steer is a Founding Partner of Matthews Steer Chartered Accountants.
Follow @mybusinessau on Twitter for breaking stories throughout the day.
Find out why you should join the SME Association of Australia.