Life insurance and health advantages for the employer.

11 April , 2014

Turning to the international practice, you can see one of the main motivational tools, in addition to wages ( or fees ) and career prospects include the so-called social packages. In its turn , as part of the benefits package provided by employers to hire workers is a priority part of the insurance. Why?

We all know that in the developed world, almost no one imagines a quiet life without the presence of a “precaution “. In many ways, there is a minimum amount of life insurance and the health of any person in most foreign countries is a mandatory requirement and is enshrined in law.

At the same time, it is necessary to consider that insurance helps relieve yourself of some of the possible financial, administrative, legal and other difficulties encountered in the process of life. For example, damage to the vehicle during a road traffic accident will necessitate the cost to repair. But even if the owner does not at the moment neither of the insurance policy or own resources – without a car can do . If the accident caused harm to human health, there is a need for additional costs of restoring his health, which should not be delayed. Therefore, the main components of the social insurance packages that are provided by many employers to attract staff in their organization, programs are life and health of employees.

So, let’s consider what exactly is the advantage of the employee if the employer he will be offered a benefits package, which includes insurance and protection.

The National Insurance Institute offers a very wide variety of foods and schemes focused not only on a variety of consumer interests, but also the financial capacity of potential policyholders. The policyholder in this case – it is an organization (company), which contracts for insurance and pays the insurance premium.

The most popular in terms of mutual interests – both the employer and employee – are products such as accident insurance, health insurance (popularly referred to as health insurance) as well as long-term life insurance. By purchasing these products for their employees, employers , improving their social protection , thereby forming corporate methods of motivation. To best understand, to examine in more detail on each of these products.

Accident insurance.

Accident insurance provides coverage from traumatic injury and other impairment of health insured person (employee organization) in the event of partial or total disability (disability) in the event of death of the insured person.

If an employee is injured, it is logical that it will take some time to restore his health , and therefore , during this period inevitably there is a decrease in its income as the material by finding ” on the sick “, and due to the need to visit a doctor, costs for restorative treatment, purchase of medicines , and possibly medical devices.

Of course, the injury – it’s totally unpredictable event, and people are always prepared to see that in addition to physical and mental discomforts are coming and contingencies. In the presence of insurance policy against accidents affected the insurance payment will be made, calculated according to the degree of injury and personal insurance sum.

Hence the first rule of insurance – if you decide to insure their employees, read in detail what insurance product you wish to purchase, choosing the best option in this case. In this case, it is the size of the chosen at the time of conclusion of the contract of insurance personal insurance amount for each insured person will depend on subsequent payments.

Example: For an insured person, for example, received a broken leg, depending on the nature of the damage (localization, fracture without displacement or offset bone fragments, the presence or absence of surgery) can receive a payment of an average of 2 % yes 40 % of the insured amount.

Thus, if the personal insurance amount of 500 thousand sum, the amount of the payment will be from 10 to 200 thousand sum, if 1 mln. sum – from 20 thousand to 400 thousand sum, if the sum insured per insured person 5 mln. sum – from 100 thousand to 2 mln. sum.

The cost of this type of insurance, depending on the number of insured persons, age and activities (which affects the extent of the risk ) is from 0.5 % to 1 % of the sum insured. By the way, do a preliminary calculation can , asking the insurer, what is the minimum amount of payment of insurance payments in the table – it’s a local document, approved by the insurance organization (perhaps a little with the other name) is the basis for calculating the size of payments for the product in virtually all insurance companies.

The policyholder can choose the time of the insurance – 24 hours a day or only during the execution of employee attendance. The insurance period is usually determined up to 1 year. Based on the nature of your organization , the area of insurance can be expanded, for example, in addition to the Republic  of  Uzbekistan can be provided to CIS countries or the whole world, except for war zones.

As can be seen, the presence of accident insurance in the social package in itself is an additional method of controlling employee and adjusting the amount of insurance coverage, or a set of risks covered by insurance, it is possible to determine the prestige of insurance for different categories of personnel.

Health insurance.

The most popular among corporate policyholders is a voluntary health insurance for employees. This product allows the insured in the event of ill health to get insurance for a period of necessary medical services without payment based on the submission of an insurance policy or service card.

This type of insurance also all depends on the sum insured and the selected insurance program. In the insurance program may be included as a standard set of services, such as outpatient services call an ambulance or a doctor at home as well as additional options: inpatient care, dental care, preventive examination, vaccination, provision of medicines. Of course, there are a number of exceptions and limitations, but at the stage of signing the contract shall, if the financial capacity, the program can make with regard to the preferences of your organization, for example, to expand coverage for dental or hospital care, vaccinations, etc.

The cost will depend on the program of insurance, the amount established limits (for options such as drug coverage and dental care, etc.) and the average age of the insured. The price is very difficult to generalize because of all these factors taken into consideration, so the focus on the minimum and extended programs.

So, the health insurance program, including outpatient care and home visits, with $ 1 million insurance sum per insured person will cost the company approximately 190-210 thousand sum, depending on the number of insured workers.

The program with the size of the sum insured in the sum of 2 million per employee, which allows for outpatient care, drug coverage ( limited to a limit in the amount of 10% of the sum insured ) emergency dental care (also limited to 10 % of the sum insured ), vaccination against influenza, will cost the company from 840 thousand to 1.02 million amounts per insured person .

It should be noted that among the classical exception of insurance product – infectious diseases. This is due in particular to the fact that under current legislation treatment of infectious diseases in special hospitals free. The same applies to the treatment of cancer and birth attendants. Therefore, for maximum protection, it is recommended to purchase a health insurance policy, coupled with the insurance policy in case of infectious diseases. In the latter specifies a specific list of diseases (measles, hepatitis, brucellosis, etc.) in which case the insurance payment will be made as a percentage of the sum insured.

As for the cost of insurance policy in case of infectious diseases, it is considerably lower than for health insurance. The rate depends on the age of the insured persons, the sum insured and the region. For an adult living in the city of Tashkent , the rate will be about 1.5% of the sum insured for the inhabitants of Syrdarya region – 0.5 %, and the Ferghana Valley – 2.0 %, etc. this is due to the available statistical data on health care in different regions of the country. When a contract of insurance in the payment can be made actual location (urban, rural), the scope of potential policyholders and therefore reduction factors applied to the base rates.

However, even if the employer provides to an employee does not complete coating consisting of two complementary species, but only a health insurance policy, then it is a very tangible support. As part of the motivation, you can use a variety of programs and insurance claims, as well as provide for the inclusion of family members in the employee number of the insured.

Long term life insurance with bonus payment

First, we note that according to the Law of the Republic of Uzbekistan “on insurance” insurance is divided into the following categories:

-life insurance (insurance of interests related to the life, health, disability and cash collateral of individuals where the minimum insurance period under the agreement is one year and includes a one-time or periodic payments of insurance premiums , which contain the accrued interest, stipulated by the contract of insurance (annuities);

-general insurance (personal, property insurance, liability insurance and other types of insurance, non- life insurance).

Insurance product “Long-Term life insurance with bonus payment” is developed on the base class 1 life insurance industry. It differs from the above product (developed by Classes 1 and 2 the general insurance industry) that insurance period can be shorter than , in that in general insurance may not exceed 12 months.

Long term life insurance with bonus payment is to combine the savings and risk functions. The funded portion consists of the possibility during the insurance period to make payments – monthly, quarterly, semiannually, or annually at the same time ( 13 months or more).

When the term of 13 months, the amount of insurance premium is approximately equal to the sum insured. However, if the contract is for a long term (5 years or more), the insured amount is much higher insurance premium. Note that the size of the premium depends on the insured amount, age of the insured, the insurance period and the schedule of payment of insurance premiums.

At the end of the insurance period shall be paid the amount of accumulated cash plus bonus – the part paid by the insurance company. Despite the fact that the size of the bonus is not as large, the main benefit is in effect for this product premiums.

First of all, in accordance with claim 28 Article 129 of the Tax Code of the Republic of Uzbekistan ( Uzbekistan TC ) found that the amount of wages and other incomes that are taxable and allocated for the payment of insurance premiums paid by legal entities licensed to conduct insurance business in the Republic of Uzbekistan for the long-term life insurance is not subject to tax (exempt from income tax).

And paragraph 33 of Art. 145 TC Uzbekistan provides that the amounts paid by a legal person as an insurance premium for long-term life insurance refers to the other costs of the enterprise. Furthermore, in accordance with  Article 307 and Hg . 172 of the Tax Uzbekistan to the amount allocated for the payment of insurance premiums to employees (as well as received by them after the end of the term of the insurance contract insurance payments ) are not charged social charge ( 25%).

So obvious profitability purchase this insurance product for the employee and the employer , because the possibility of applying the term life insurance, you can not only create a powerful motivational tool for the promotion of employees, but also to do it with tangible savings for the enterprise.

Many people may ask, what is the difference of the storage tool in the long-term life insurance from a bank deposit? The difference is that as mentioned above, the contract is concluded, on the one hand , the opportunity to phase- accumulation of funds  on the other – provided insurance coverage for the duration of the period of insurance. Risk part or, in fact, the insurance cover includes two risks: the risk of survival and risk of death. In the first case, all the accumulated amount paid , including bonus. In the second – the sum insured (without bonus), and no matter how many contributions had to pay the insured at the time of death of the insured .

Given the existing tax breaks for the product concerned, it is clear that regardless of the level of activity and number of employees of the organization, long-term life insurance employees can be an effective tool for motivating employees, at the same time introducing additional methods of savings for the company.

What else should I consider?

Regardless of whether we choose a product or service, it is important to choose a manufacturer or supplier. What should you look for when choosing an insurance company ? First of all, specialization, experience in the market (and in a particular direction ) the financial stability of the partners in the maintenance of the insured ‘s client base (again – for your products).

Then you should have in mind that cheap is not always to be a determining factor in choosing a partner for insurance. Sometimes, buying the product at low prices, you may be faced with the situation that the conditions of the agreement contains a number of exceptions and the price in the end it turns not so small. And of course, no harm will get recommendations , because insurance is a sphere, which involves long-term cooperation.

The above products are, of course, not the only ones. You can pick up the packets that appear to be the client the most optimal. And in the case of the acquisition of comprehensive insurance (consisting of several kinds), the insurer is more likely to get the most favorable price offers.

To sum up, we think, for readers already obvious how interesting and effective can be the use of personal insurance in the construction of a corporate strategy to attract, motivate and retain staff.