In week 7 of his 15 week blog Carl discusses the fifth of Barnett Waddingham’s 6 pillars of employee wellbeing: protection.
What do I mean when I say protection in connection with employee wellbeing? I am not referring to some employer-based mafia-type protection, and nor am I referring to being followed around by two heavy set 7ft men in dark suits and sunglasses. In fact what I am referring to is the protection needs of the employee in relation to their lifestyle and their family should their circumstances change for the worse.
We are all acutely aware of the need to provide protection for ourselves, we all do it: we take out car insurance to protect ourselves in the event of an accident (and because it's compulsory), we protect our homes with content and building insurance and we even protect our pets (how it costs over £500 to have some gravel removed from a dog's stomach is beyond me). We all have the same need and desire to protect our families and our lifestyle in the event of ill health, death and long-term disability, and on the whole it is our employers that provide that protection for us.
In week 2 of this blog series I scored 6 out of 10 in protection, which at face value appears to be a fairly low score. The reasons for this will hopefully become apparent further into this blog.
The difficulty with protection is that every individual employee will have their own protection needs and on the whole employees are provided with blanket protection or - at worse - no protection at all. Most employers will provide their employees with death in service cover, a minority will provide long term disability insurance and some will provide health-related cover such as private medical insurance.
I myself have a family: I have a six month old, and my wife has given up work to bring up our son. In the event of my demise I would need to ensure my wife has enough money to survive and bring up our son without financial worry; obviously losing me would be heart-breaking enough without having to worry about paying the bills and putting food on the table. My employer provides me with 4 x salary as a standard and we have the ability to flex that cover up or down to suit our individual needs. Before the birth of my son we had decided to flex that down as we didn’t need the cover, subsequently we have decided to flex that up, albeit restricted by the rules of the scheme (my main reason for scoring lower on protection).
In terms of long-term disability I have cover that provides 65% of my salary in the event of my inability to work in the long term. I personally think that long-term disability cover is the most valuable protection benefit you can have. I think people naively believe that the state will provide when it comes to long-term disability but in truth the state will provide very little: around £500 per month. That amount isn’t sufficient to pay half of mortgages let alone bills, food, car repayments and so on. Debilitating conditions can happen to any of us and the vast majority of people need extra long-term disability cover should they suffer from such a condition. In truth the majority don’t have it.
I believe that death in service cover and long-term disability cover especially should be as compulsory as pension provision. We care so much about protecting our future that we neglect to protect the here and now.
Some of you will have picked up on my exclusion of private medical insurance as a protection benefit, in reality if you have something seriously wrong with you then the NHS will provide. Medical insurance is either at my skeptical worst a ‘nice to have’ or at my embracing best a very good tool to return employees to health quicker - benefiting both employer and employee.
How do we make our employees feel more protected? Firstly, we need to provide them with cover. In my opinion we need to ensure that all of our employees have death in service and long-term disability cover. At the very least we need to provide this as an option for employees to purchase at their own cost. We need to provide flexibility around death in service cover and never for long-term disability (other than increasing cover).
Finally we need to educate. I think that we forget that the Average Joe on the street doesn’t have a clue what long-term disability insurance does, they have no idea how much the state will provide them as cover, and at worst most have no idea what protection their employer has in place on their behalf.
My advice therefore is simple: provide cover, or at the very least choice of cover at the employees' cost, provide flexibility where appropriate and tell your employees what the reality is and help them select the right cover for them. If we don’t do this I am afraid that the list of horrendous stories of people in extreme poverty following the death of a loved one or the inability to work following illness will continue to grow.
Next time I speak about protection I am going to report back on our survey results.
Next week’s pillar will be work/life balance.