PAI as an employee benefit

Employees are unable to secure the level of cover available on a Personal Accident policy on an individual basis. This affordable cover is only accessible via the employer and adds immense value as part of the employee benefits package.

There has been more awareness regarding Personal Accident Insurance (PAI) recently as a result of the Road Accident Fund (RAF) restrictions, which have been widely publicised. But there are more compelling reasons why employers should consider this cover.

Benefits for employers

"It is globally recognised that the wellness of employees contributes towards the bottom line," says Brad Toerien of FMI. "Good employee benefits attract and retain employees.

"In addition, on some policies the Temporary Income Protection benefit can be paid directly to the employer to either pay for a replacement staff member or towards the salary of the absent employee whilst on sick leave, taking the financial stress off the employer when an employee is unable to work."

Benefits for employees

"PAI plays an important role in a family or individual's life as it serves as a hedge against the loss of income following the death or disablement of a breadwinner. These benefits enable employees to make provision for unforeseen events when they are no longer able to earn an income, which can have a huge impact on their retirement. This ensures that their debt is effectively catered for, a decent standard of living is maintained should incapacitation or death occur and safeguards their dependents future," adds Toerien.

"Furthermore, PAI can ensure that after incapacitation, the medical expenses and rehabilitation costs of the individual are paid for. This includes providing for the costs of lifestyle adjustments associated with living with the disability such as specialised care and equipment. Employers offering PAI therefore provides a safeguard for their employees against personal financial distress."

Broad cover

"As a broad definition, all the benefits offered by a PAI policy follow an ‘accident' or ‘injury' and as a general rule include Death, Disability, Loss of Income and actual Medical Expenses," says Adrian Hofman of Health and Accident.

"A Group Personal Accident Policy also offers affordable cover to all employees – not only salaried employees, permanent employees or employees who belong to a pension fund. The affordable cover can extend to a specified category of employee, such as ‘all sales reps', ‘all temporary staff' or ‘all wage earners'. In this way, an employer is able to offer various levels of cover to all categories of employees without being concerned about the administrative procedures of ensuring that all employees are always covered, since underwriters do not require a list of all employees on a month-to-month basis.

"An employer is also able to purchase Personal Accident cover on either a 24 hour basis or a working hours only basis. This latter option is even more affordable – with premium reductions of up to 25%."

Hofman says that for less than R20 per month an employer can secure cover for an artisan employee, for the following aspects of cover:

Accidental Death:                                                              R 100 000
Accidental Permanent Total Disability:                                R 100 000
Accidental Loss of Earnings:                                               R 1000 per week
Accidental Medical Expenses:                                             R 20 000

Opportunity for brokers

"PAI is one of the most affordable categories of ‘catastrophe' cover available, yet it is probably one of the least marketed types of cover sold to employer groups, even though the premiums are tax deductable to the employer," notes Hofman.

"In the existing economic climate there are many employers who will be seeking affordable solutions to various employee demands for adequate covers. Brokers should be putting forward the full spectrum of options to their clients, informing employers of the various levels of cover available in the market."