Attraction and Retention - Solving An Employer Challenge for 2022

Small and Medium Sized Businesses (SME’s) are the lifeblood of the New Zealand economy, with over 470,000 SME’s employing over 584,000 staff. Much has been made recently of the staff shortages NZ businesses are experiencing,  and the predicted “great resignation’’ once the borders open after prolonged closure. In a tight labour market, employers are always looking for new ways to attract and retain talent. A recent global wellbeing survey indicated that 82% of organisations believe wellbeing is important within their company. However, 'wellbeing' can have can have different meanings to different people.

Two meanings that are universally accepted in relation to it are Health Wellbeing, and Financial  Wellbeing.  Employers can provide this wellbeing via “Employee" insurance programs that provide staff with Health insurance benefits so they can getter better, and back to work faster, and insurance benefits that pay cash to staff should they suffer a major illness or disability, relieving financial worry and stress. 

Employee or “Group” insurance places value on employees’ wellbeing and shows that their employers genuinely care about them. If you are an employer with at least 5 employees, it’s a fantastic gesture to build loyalty, retain staff and reward them for their hard work. These plans also have the valuable advantage of providing a higher level of coverage, and at a much lower premium cost than an individual employee could access themselves.
 
A recent report by the Financial Services Council of New Zealand shows that “Group" insurance for employees is one of the fastest growing sectors of the insurance industry. This is because more and more employers realise the value it holds for employees from internationally mobile staff through to blue collar workers, and what great value it represents on ROI per dollar spent (cost is usually well below 1% of remuneration expenditure). Group medical insurance schemes are also available and are generally an exceptional and cost-effective option that gives your employees medical cover at lower costs than they could access themselves.
 
To find out more, or to receive a free no obligation consultation or quote you can contact our resident expert,  Peter Wilkening of Spratt Corporate Employee Benefits for a chat.

Read More about Employee Group Schemes here.
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Five Sticky Situations Insurance Could Bail You Out In

1. Being diagnosed with a chronic condition.

As described in one of our earlier posts, at the age of 21 I was diagnosed with Crohn's Disease. Luckily, my conscientious mum had organised me health insurance cover before this happened, and all of my surgery and specialist costs since then have been completely taken care of by Southern Cross. Doing some loose calculations, those costs would have been upward of $20,000 so far, with unfortunately more to come in the future. If I had waited and investigated getting insured after I was diagnosed, I would have either had to cope with a large policy loading or my pre-existing condition may have been excluded entirely. So, having insurance already, before I was diagnosed kept my premiums affordable, and spared me a debt in the tens of thousands.

2. Being disabled in an accident and being unable to work.

Some accidents or conditions can be lived with and managed, and won't affect your ability to earn a living. But many of them will, either for a finite period of time or you may be unable to return to your profession indefinitely. If you have Total Permanent Disablement Cover (which is very affordable in terms of premiums) or Income Protection, you won't have financial burdens adding to your stress during already trying times while you recover. You can focus on getting well, and your family will be secure while you do.

3. Losing Your Job/Being Made Redundant

Unfortunately, it happens everyday. People lose their jobs or are made redundant and left with a whole bunch of worries, including meeting the bills, paying the rent all while finding another job quick smart. As covered a little while back, redundancy cover is a cheaper form of income protection which can protect your income while you search for new employment after being made redundant. As long as leaving your employment wasn't voluntary on your part, you can be covered! Read More Here.

4. Having a crucial person within your business fall ill.

Some of us have more to worry about than just themselves. If you own or manage a business, you may be relying on many key people underneath you to keep your business running, keep it profitable and ensure its managed properly on a day to day basis. If one of these people, say a co-director, a production manager or a reliable member of staff suffers a serious illness, condition or injury, you could be just as stuck as if one happened to you yourself. Key Person Insurance Cover is designed for this circumstance to protect your businesses profits if one of your most crucial employees goes down. 

5. Being stuck overseas due to flight cancellations, injury or natural disasters.

Another one that happened to me recently! After American Airlines cancelled my connecting flight back to Los Angeles, I was left stranded in Pensacola, Florida with no way to make my flight back from the States to Auckland. My case was comparatively minor to cases of people in my life I've known of, but paying for the extra nights hotel, meals and transportation would still have set me back close to $1,000 without travel cover. Other's I've known have had it far worse as the Icelandic Volcano eruption a few years back grounded flights all over Europe for the better part of a week, forcing them to watch as their extra costs skyrocketed. Trust me, being overseas hoping that your plans and schedules will all fall into place seems a lot more of a stretch to me than it did before. 

Thanks for reading! Visit www.sprattfinancial.co.nz for more info.

Key Person Insurance Cover

Key Person Insurance is a form of risk insurance that is designed to help out your business if one of your key employees is rendered unable to work due to health issues or disability. This type of insurance cover can be useful for businesses who rely or depend on one or more key employees to maintain profitability. For instance, in our case study of Justin and ABC Engineering, Justin held a key position within the business, with a large proportion of the company's monthly income attributable to his relationships with clients. If you have key person cover, the devastating loss of someone like Justin to illness or disability can be mitigated by a monthly benefit to the business, designed to cover the loss of income your insured employee would have brought you.

Is Key Person Cover Useful?

ACC Research, conducted in June 2006, revealed that a huge 67% of small or medium business closures in New Zealand are due to the injury or disablement of a key person or employee. The same study showed that only 8% of business closures in comparison were caused by the fact that the business became unprofitable or no longer viable, showing that by far, injury or illness is the biggest risk to small business in New Zealand.

Furthermore, we have previously discussed the statistics regarding critical illness in New Zealand, which are applicable here too. 51% of males and 33% of females will suffer a critical illness before the age of 70, and if or when it happens to one of your businesses critical personnel, having an assured monthly flow of income to cover it can help your business survive, recover and prosper again.

How does it work?

- When the cover is taken out, the amount that is paid to you monthly in the event of your employee being rendered unable to work is agreed to, so that you will know specifically the level of benefit you will receive. This amount is of course, negotiable and it can be set based on your personal needs.

- The benefit itself is typically payable for a maximum period of two years.

- It is possible to lower the monthly insurance premium you will pay for your Key Person Insurance Cover by adjusting the length of time you have to wait after your employee is incapacitated before your payment kicks in. The longer period of time this is, the lower your monthly premium will be.

What other features can Key Person Cover Offer?

- Recurrent Disability Allowance: If the key person or employee covered suffers a relapse of the same condition within 6 months, your wait period can be waived so the benefit kicks back in immediately where it left off without a further wait period needed.

- Additional Payment in Case of Death: If the key person or employee covered sadly passes away while you are receiving your monthly key person insurance payment, your business can receive an additional payment of 6 times the monthly benefit to help you cope with the tragic circumstances.

- Changes can be made at anytime to reflect your current needs, and your insurance cover, waiting periods, amount of employees covered can be reviewed and changed at anytime, giving your cover flexibility as your business changes.

If you need more information, have any questions or you would like to get your businesses employees covered, post a comment below or contact us at enquiry@sprattfinancial.co.nz.

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