Group Critical Illness Cover: What it Actually Pays Out

Group critical illness cover is there to provide employees with a lump sum payout entirely tax-free if they’re diagnosed with a covered condition. It’s a type of employee benefit that provides financial breathing room when you need it most.

In recent years, insurers paid out a record £1.2 billion in qualifying claims, providing additional financial support to employees. Investing in this type of employee benefit works for everyone, with businesses gaining a more attractive benefits package while giving employees peace of mind when life takes an unexpected turn.

Group critical illness cover: Simply explained

Group critical illness cover is a benefit provided by employers to their workers. If an employee is diagnosed with a qualifying condition, they receive a tax-free lump sum directly from the insurer.

Today, only about 12% of UK adults are covered by these policies, but it’s a benefit that younger workers are increasingly interested in. Unlike private medical insurance that funds treatments, critical illness cover provides a lump-sum cash payment.

What can these payments help with?

• Keeping up with rent and mortgage payments.
• Covering those everyday costs.
• Adapting homes following treatment.
• Reducing financial pressures whilst they’re off work.
• Supporting childcare and other care needs.

Unlike standard income protection insurance, this benefit isn’t linked to salary. Instead, it’s set at an agreed-upon amount based on the policy itself.

At Dragonfly Crowd, we take the time to help you understand the ins and outs of your policy, how the claims process works, and how it can slot in alongside your overarching employee benefits scheme.

What conditions does group critical illness cover pay out for?

Group critical illness cover isn’t a standardised policy. The nature of the coverage depends on your exact policy. As your independent insurance intermediary, we explore a wide panel of insurers to ensure you get the coverage that suits your company.

Some of the most commonly covered conditions include:

• Heart attack
• Stroke
• Cancer
• Multiple sclerosis
• Kidney failure
• Permanent disability
• Loss of sight
• Organ transplants

Policies often cover an even wider set of qualifying conditions, with benefits sometimes including child critical illness benefits. With so many available policies, it’s vital to speak to an independent insurance intermediary like us, so that you can understand exactly which conditions are covered and the benefits that come with successful claims.

How much does group critical illness cover pay out?

The amount paid out to employees who have to make a claim depends on the policy. Many businesses may choose a fixed benefit for all eligible employees, whereas others can link benefits directly to salary, if they choose to do so. Typically, this coverage has maximum payouts detailed in their policies.

With one in three believing that this type of cover is too expensive, providing it under a group scheme gives employees peace of mind without the cost. That’s the benefit of coverage based on a group scheme.

Likewise, some policies are employer-funded, employee-funded or provided via more flexible funding arrangements. The best option really depends on your business and your benefits program.

Critical illness lump sum vs. staged payouts

Critical illness cover typically pays out a lump sum on making a successful claim. It’s known as a lump-sum or full payout.

Some group policies, though, may cover early-stage diagnoses and less severe medical conditions. In this case, they may offer partial or staged payouts. Essentially, these are payouts that form a percentage of the main payout. The exact amount usually depends on the condition and the policy’s wording.

Staged payouts are ideal for group policies because they allow less severe health events to be recognised for their financial impact even when they don’t qualify for a full payout.

Typical claim values for group critical illness cover

There’s no typical claim value for group critical illness cover because these programmes are built around the chosen benefit level.

On the other hand, any claim for a core condition will typically pay the full insured amount. A claim for an additional, “less severe” condition may provide a defined percentage of the complete amount.

In the latter case, what happens afterwards depends on the policy you hold. Some providers continue to provide the main benefit, so if an employee is later diagnosed with a core condition, they can receive the full payout. Other schemes reduce the remaining cover. The rules differ from provider to provider, so it’s worth speaking to an insurance expert before selecting your coverage.

Is group critical illness cover worth it for your business and employees?

Group critical illness cover demonstrates your commitment to supporting your employees’ health and well-being. It can also sit alongside other protection benefits to provide a well-rounded plan that offers real value to your team.

Other complementary benefits might include group life insurance, private medical insurance and income protection. Together, these benefits give your team confidence that they’re properly supported by their employer, which can make it easier to attract leading talent and increase retention rates.

For employers, there’s also a financial benefit to choosing group critical illness cover. It’s more cost-effective than arranging similar protection individually. As a people-focused benefit, it’s all about making your employees the heart of your business and providing them with the practical support they need should life take an unexpected turn.

At Dragonfly Crowd, we’re your insurance intermediary, providing jargon-free explanations of this type of cover. We can help you contrast and compare policies and support your search through a wide panel of insurers so you can obtain the coverage your employees truly value.

If you’d like to learn more about group critical illness cover, contact Dragonfly Crowd to speak to one of our experts today.