New economic research has put workplace insurance in the spotlight, looking at whether a tax change could encourage more employers to provide insurance benefits to their staff.
The NZIER research, commissioned by the Financial Services Council, examines the potential effects of removing Fringe Benefit Tax (FBT) from employer-provided group insurance schemes. NZIER says FBT can act as a disincentive for employers to provide this type of cover.
The modelling covers group life and health insurance and considers the wider role workplace cover can play when illness, injury, disability, death or loss of income affects a household.
What did the research find?
NZIER estimates that removing FBT from group insurance schemes could deliver up to $198 million in net economic benefits. The Financial Services Council says the modelling also estimates that group health insurance coverage could extend to around 200,000 additional New Zealanders.
These figures are modelled estimates, not outcomes that have already occurred. Removing FBT from workplace insurance is a proposed policy change, so the research does not mean employees' existing insurance arrangements or tax treatment have changed.
For someone who already receives insurance through work, however, the discussion is a useful reminder that workplace cover can form part of their wider financial protection.
Do you know what your workplace cover includes?
Employer-provided insurance can vary considerably. Depending on the workplace scheme, an employee may have access to health, life, trauma, disability or income protection cover, but the type and level of protection will depend on the particular arrangement.
It can be worth checking what cover is actually provided, how much you are insured for, whether any benefits are linked to your salary and what conditions apply.
It is also useful to understand what happens if your employment changes. Cover provided through a workplace may not necessarily continue in the same way if you leave that employer, so the terms of the scheme matter.
How does it fit with your other insurance?
The Financial Markets Authority's consumer insurance guidance recommends checking whether you are already covered through another product and revisiting insurance regularly, particularly when there is a major change in your life.
That makes workplace insurance worth considering alongside any personally owned policies rather than viewing it in isolation. The aim is to understand how the different pieces fit together, where benefits may overlap and whether there are areas where your current protection does not match your needs.
This does not automatically mean more cover is required. The appropriate type and amount of insurance will depend on factors such as your income, financial commitments, family circumstances, existing policies and what you could afford to pay in premiums.
A useful prompt to review your cover
The current discussion about workplace insurance is focused on a possible change to the tax treatment of employer-provided cover. Whether or not that proposal progresses, employees who already receive insurance through work can use it as a prompt to understand what they have.
An insurance adviser can help you review workplace and personal cover together, explain how the policies work and identify questions you may want to ask about your existing protection.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.