Employers lack understanding of group critical illness

Only a quarter of employers have a good understanding of group critical illness (GCI) cover, according to new research.

Industry body Group Risk Development (GRiD) wanted to find out whether employers are aware of how GCI pays out and how it can help employees who are diagnosed with a serious illness.

In a survey of 500 HR decision makers in 500 UK businesses, just 27% identified the correct definition of GCI as 'a policy taken out by an employer to provide a tax-free lump sum to an employee on the diagnosis of one of a defined list of serious conditions or on undergoing one of a defined list of surgical procedures'.

Some employers wrongly believe that this form of group risk insurance pays an income (rather than a lump sum) to employees while they have a serious illness, or is simply to cover expenses as a result of the illness. Others mistakenly thought the policy paid out to the employer instead of the employee.

In fact, a claim can be initiated once the employee has survived a critical illness included under the policy for a specific period of time (typically 14 days) and the employee has complete freedom about how they use the pay-out, GRiD explained.

For example, they may choose to spend it on paying for treatment or adapting their home, for everyday living expenses, to supplement sick pay, to take their family on a much-needed holiday, or to give time away from work to re-evaluate their life.

The latest industry figures show that the average claim on GCI insurance was £71,463.

According to GRiD's research, the most popular reason for offering group critical illness cover is to 'look after staff and their families'. In addition to a financial pay-out, GCI can also help with emotional and practical support through access to an Employee Assistance Programme, a second medical opinion service, personalised cancer support, nurse-led support or a treatment-sourcing service.

Without the protection of GCI, employees who fall ill could face the additional burden of financial stress -- which is not only unsettling in itself, but may also be unhelpful in recovering from a medical condition or surgery, said Katharine Moxham, spokesperson for GRiD.