Employee Insurance Benefits

What employers should know about staff insurance benefits

Employee Benefits Programs Group Insurance

What are staff insurance benefits?

Employee insurance benefits, also known as perks or fringe benefits, are provided to employees over and above salaries and wages. These employee benefit packages may include overtime, health insurance, holiday, profit sharing and Kiwisaver to name just a few.

Getting started with employee benefits

Employee benefits can mean something different to everyone involved. And once you’ve found great employees, how do you keep them from jumping ship? One way is by offering great staff benefits. Great employee benefits programs can do wonders in retaining great people and attracting other highly capable talented professionals. Such a well-developed employee benefits program can encourage your employees to refer the best talent from their own professional networks. Incentivising staff with bonuses and rewards can make the program successful.

Some permanent staff benefits:

  • Health or Medical Insurance
  • Life Insurance
  • TPD (Total Permanent Disablement) Insurance
  • Disability Insurance
  • Kiwisaver
  • Gym memberships or discounts
  • Mobile phone and/or internet allowance
  • Time in lieu
  • Upskilling support
  • Free Parking
  • Stock Options

Employee benefits advantages

Subsidised workplace insurance can produce a tangible return on investment for your business, by helping to:
  • Reduce absenteeism
  • Increase job satisfaction
  • Increase staff loyalty

Types of employee insurance benefits:

To attract talent and to compete effectively, many businesses offer employee benefits programs. Staff wages and benefits are typically one of your heftiest expenses as a business owner or HR-manager. Yet the benefits you offer, can mean the difference when potential employees choose their employer.

With so much on the line, it’s important to be strategic when you’re deciding what you’ll offer your workers, regardless of your budget or the number of people you employ. To do that, your benefits program should:

  • Have clear goals and outcomes
  • Be financially sustainable for the business, and
  • Attractive for current staff and potential new staff

Take these steps to build an employee benefits program that won’t break the bank.

1. Know your budget and goals

Ask yourself why you are offering employee benefits and how much can you spend. With specific goals and budget in mind, you’ll keep a focused approach as you choose which benefits to offer.

For instance, you might want workplace benefits that allow you to

  • Attract and retain highly talented workers
  • Improve company culture
Often competing with bigger companies, corporates or state enterprises you can’t afford what they offer to pay. But as a small or medium business in New Zealand, you can offer some perks and fringe benefits the big companies can’t which might attract some candidates.

2. Required employee benefits

New Zealand employment law identifies some specific benefits such as

  • Kiwisaver


Group medical insurance for a stronger, happier and healthier workforce.

One of the top benefits employees rate


Group life insurance: shows you value what matters most to them – their loved ones 

Your staff financial wellbeing, means the family is taken care of  events can easily break the bank – it’s best to have a backup plan. 


Experts you can trust with life, health and income protection. 

Unexpected events can easily break the bank – it’s best to have a backup plan. 

What is Group Life Insurance?

Group life insurance is a type of life insurance where a single contract covers an entire group of people. The employer-paid policy covers their employee or members of a group typically available to the organisation of 10 staff or more.

Employer-funded schemes can come with powerful benefits, such as full cover for pre-existing health conditions and heavily discounted premiums.

Group insurance encompasses Life, Income Protection or Medical insurance cover for a defined group of people.

When employees choose to add family members, discounts also apply. 

Your employee benefits package as a whole can contribute to employee happiness and well-being, and improve your company’s recruiting and retention of valued employees.

LifeCovered has a strong background in group medical and group life insurance schemes.

What types of group coverage are available?

Some employers will bundle multiple types of coverage into a group policy, which can include:

Life Insurance

A traditional life insurance policy pays out a lump sum if the insured dies or is diagnosed with a terminal illness. This is the most common benefit type.

Total and Permanent Disablement Cover (TPD)

If your employee is totally and permanently disabled they will receive a lump sum of money with TPD cover. This can help with modifications to their home, to pay for the family to be closer or for additional help.

Income Protection

Also known as disability insurance, income protection insurance pays out up to 75% of the pre-disability income of your income if you become unable to work.

Critical Illness

Pays out a lump sum if you’re diagnosed with a serious medical condition such as cancer, heart attack or stroke.

Health Insurance

Medical insurance benefit generally comes with discounted premiums to employers. It enables staff to get medical insurance and pre-existing health conditions may be covered. Health insurance means your staff can avoid the long waiting lists and therefore return to work sooner.

What are the key employee program benefits?

- Automatic Acceptance

A key benefit of group life insurance is automatic acceptance, which means that your employees do not need to take a medical exam or submit medical information to be approved for coverage.

This is different from life insurance purchased in the individual market, which often requires a medical exam for the insurer to underwrite and make you an offer.

This makes insurance cover readily accessible for some employees who might otherwise not be insurable on standard terms

- Value for Money

For a small proportion of your total salary budget you can provide cover for your staff, which helps them to feel valued and helps you retain your valuable employees.

When an insured person leaves your employment they can choose to continue their coverage under an individual policy with no additional underwriting.

- Cover available during unpaid leave

Cover can continue for your employees on parental or other unpaid leave as long as premiums continue to be paid.

How does Group Life Insurance work?

Group Life Insurance is much like individual life insurance. A payout is if your employee is diagnosed terminally ill or dies. Premiums are paid by the company. 

Why should I offer Group Life Insurance?

A recent survey by Seek.co.nz identified that employee benefits play a significant role in addition to salary when considering to stay or change jobs. 

Here are some benefits

  1. Attract Potential People
  2. Retain Key Staff
  3. Improve Productivity

A group life insurance scheme therefore is 

Who pays the insurance premium?

You can choose to pay for all, part, or none of the premium with group life insurance. If your budget is tight, employees could pick up the entire cost of premium with voluntary group life insurance.

How employee benefits programmes work?

As an employer and setting up the employee benefits program, employers can opt for different types of schemes.

Voluntary schemes

With voluntary schemes the premiums are not subsidised by the employer; they are instead paid by the employee. As a result, employees choose whether or not to join.

Compulsory schemes

With compulsory schemes the employer pays for insurance cover for all eligible employees. As the benefit is free to employees, membership of the scheme is usually mandatory and all employees who fit within the eligibility criteria are included.

Partially subsidised schemes

Partially subsidised schemes are voluntary schemes where the employer and employee share the costs. As there is no guaranteed uptake of membership, these types of schemes only attract limited concessions from insurers.

For businesses an employee benefit programme makes a very sound investment.

IRD, Group Life Insurance and Fringe BenefitS Tax (FBT)

Inland Revenue (IRD)is reviewing employers who take out group life insurance, disablement and trauma insurance policies to cover employees.

Where an employer has taken out an insurance policy in its own name, but it’s the employees who receive the benefit of any claim, FBT will apply to that policy.

FBT will also apply where the employer is the beneficiary of the policy, but the employer is holding the policy for the benefit of the employees or their estates (that is the employer has agreed to pay any receipt under the policy to the employee).

For more about Fringe Benefits Tax on Group Life insurance, disablement & trauma insurance.

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What is next?

We are fast-growing NZ financial advisers built on old time values with a mission to make insurance easy to understand. 

We specialise in financial advice to both individuals and SME’s on everything from life, health and income protection insurance.

LifeCovered is a registered financial service provider with the New Zealand Companies Office.