What employee benefits should my business offer?

1. Group Private Medical Insurance (PMI)

Group private medical insurance — also called company health insurance or group PMI — is consistently ranked as one of the most valued employee benefits in the UK. It gives employees fast access to private diagnosis and treatment, bypassing NHS waiting times.

A standard policy covers inpatient and day-patient treatment at private hospitals, outpatient specialist consultations, diagnostic tests, and surgery. More comprehensive policies add mental health support, physiotherapy, cancer care, dental, and optical cover.

For employees, the appeal is straightforward: if they are ill or injured, they are seen quickly by a specialist rather than waiting months on an NHS list. For the business, it means staff return to work faster after illness and feel genuinely valued.

Group PMI is a benefit in kind for tax purposes, meaning employees pay income tax on the value of the premium. The business pays Class 1A National Insurance at 13.8% on the benefit but can offset premiums as a corporation tax expense. Despite the tax treatment, it remains one of the most cost-effective benefits available in terms of perceived value to staff.

2. Group Life Assurance (death in service)

Group life assurance — commonly called death in service — pays a tax-free lump sum to an employee's family if they die while working for your business. The payout is typically expressed as a multiple of salary, most commonly four times annual salary, though two, three, or five times are also common.

From the employee's perspective, death in service provides meaningful financial security for their dependants at a time when they would otherwise be dealing with the sudden loss of the employee's income. It is one of the few benefits that employees genuinely feel grateful for, even if they never use it.

From the business perspective, group life assurance is arguably the most cost-effective benefit you can offer. Premiums are low — typically 0.3% to 0.8% of the insured salary — because the risk of a working-age employee dying in any given year is statistically small. Yet the perceived value to staff is high.

Premiums are a business expense for corporation tax purposes. The benefit is paid under a discretionary trust, which means it falls outside the employee's estate for inheritance tax purposes and can usually be paid to the family quickly without going through probate.

If you are only going to offer one group insurance benefit, death in service is often the right place to start.

3. Group Income Protection

Group income protection (GIP) pays a proportion of an employee's salary — typically 50% to 75% — if they are unable to work due to illness or injury for an extended period. It kicks in after a deferral period, usually three or six months, and continues to pay until the employee returns to work, reaches a specified age, or the policy ends.

Statutory sick pay (SSP) in the UK is currently just £116.75 per week, paid for a maximum of 28 weeks. For most employees, that is a significant drop from their normal earnings. Group income protection fills that gap, meaning employees do not face financial hardship during a long period of illness — which in turn means they are less likely to rush back to work before they have recovered.

Premiums are typically 0.5% to 2% of insured salaries per year, depending on the workforce, deferral period, and benefit level chosen. Longer deferral periods (waiting longer before the benefit starts) reduce premiums significantly. The premium is a business expense and the benefit is paid to the employer, who then pays the employee through payroll.

4. Group Critical Illness Cover

Group critical illness pays a tax-free lump sum to an employee on diagnosis of a serious condition — typically including heart attack, stroke, most cancers, and a range of other specified conditions. Unlike income protection, which pays a regular income, critical illness pays a one-off lump sum that the employee can use however they choose.

The lump sum is typically expressed as a multiple of salary — one, two, or three times — and can be used to pay off a mortgage, cover treatment costs not funded by health insurance, adapt a home, or simply provide a financial cushion while the employee and their family adjust.

Critical illness is less common in group benefit packages than life assurance or income protection, but it is increasingly offered as part of a more rounded benefits suite. It tends to be valued most by employees who have mortgages or financial dependants and who understand the impact a serious diagnosis can have on household finances.

5. Business protection

Business protection is slightly different from the benefits above — it protects the business itself rather than your employees directly. There are two main types:

Key person insurance

Key person insurance (also called key man insurance) pays a lump sum to the business if a key employee or director dies or becomes critically ill. The purpose is to cover the financial impact on the business — lost revenue, recruitment costs, the cost of training a replacement — during the period of disruption.

Most small businesses have one or two people whose absence would significantly damage the business. If that person were to die or be diagnosed with a critical illness, the lump sum gives the business time and resources to manage the transition. Premiums are paid by and paid to the business, and are typically a business expense where the policy does not have a surrender value.

Shareholder or partnership protection

If a business has two or more shareholders or partners, shareholder protection ensures that the remaining owners can buy out the share of a deceased or critically ill shareholder from their estate. Without it, the estate may inherit a stake in the business, which can create complex and potentially damaging ownership situations.

Each shareholder takes out a policy on their own life for the value of their share, written in trust for the other shareholders. On death or a specified critical illness, the payout funds the buyout. It is a relatively simple and affordable way to protect the business from what can otherwise be a very difficult situation.

6. How to build a benefits package

You do not need to offer everything at once. Most small businesses build their benefits package in stages, starting with the highest-value, lowest-cost options and adding to them as the business grows.

Start with the foundations

Death in service is the natural starting point. It is inexpensive, genuinely valued by employees, and relatively straightforward to put in place. If you can only do one thing, this is it.

Group PMI is often the next step, particularly if your business is in a competitive hiring market. The ability to tell candidates “we provide private health insurance” carries real weight and, for many employers, the recruitment benefit alone more than justifies the cost.

Add protection as you scale

Group income protection becomes increasingly valuable as your business grows and individual long-term absences would be more disruptive to manage. If you already pay above SSP contractually, formalising this through a group income protection policy removes the open-ended liability from your balance sheet.

Critical illness and business protection products can be layered in as your workforce grows or as specific needs arise — for example, if a key hire joins whose absence would have significant commercial consequences.

Talk to a broker

The group insurance market is not straightforward to navigate directly. Insurers price differently, include different things as standard, and apply different underwriting conditions. A whole-of-market broker will compare all relevant providers, present you with clear options, and handle the administration of setting up the policy. There is no additional cost to using a broker — they are paid by the insurer, and the premium you pay is the same as going direct.

7. Get a free quote

If you are not sure where to start, the simplest thing to do is talk to us. We work with small and medium-sized businesses across the UK to find the right benefits for their team and budget. We will give you a clear picture of what is available, what it will cost, and what we recommend — with no obligation to proceed.

We compare all major insurers including AXA Health, Bupa, Vitality, Aviva, Canada Life, Legal & General, and Zurich to find you the most competitive terms. And because we handle the paperwork, setting up a group scheme is straightforward — even if this is the first time you have offered benefits to your staff.