The last thing anyone needs to worry about after being diagnosed with an illness is how they’re going to pay the bills. Group Critical Illness cover provides the financial support needed during a difficult time. It can be used in anyway an employee sees fit – such as payment towards paying off the mortgage, seeking professional care or even updating their home – it’s up to them.
Group Critical Illness cover pays a tax-free* lump sum directly to an employee should they, their spouse or partner (if covered) or child, suffer any of a list of defined medical conditions or surgical procedures, classified as critical illnesses (e.g. cancer, heart attack, stroke), and survive for certain number of days – typically 14 days.
The benefit is normally calculated as either a multiple of salary (typically between 1 and 5 x each member’s salary) or a fixed amount of benefit for each member with a maximum benefit per claim – typically set at £500,000.
Insurers provide two levels of cover:
Base cover – which includes a number of critical illnesses which they cover as standard, for example – heart attack, stroke, cancer and dementia.
Extra cover – which includes the conditions covered under the base cover but provides additional cover for conditions such as brain tumour, rheumatoid arthritis etc depending on the insurer.
The conditions covered are fairly standardised between insurers but there are slight variations between them.
Where cover is paid for by the employer, corporation tax relief is given on the premiums, the employer is liable for Class 1A National Insurance contributions on the premiums and premiums are treated as a P11D benefit for employees**.
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*Tax concessions are not guaranteed and may change in the future. Tax free means the investor pays no tax.
**HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen
