Employee Benefits Glossary

Below is a glossary of the most commonly used Employee Benefit terms.

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General

Benefit in Kind: non-monetary rewards that an employee receives from their employer.

Continuous Insurance: when a policyholder has been insured by an insurance provider without any lapse in coverage, for a set period.

Insurance Underwriting: the process of evaluating a company’s risk or an individual’s health or life, to determine whether it would be profitable for an insurance company to provide coverage.

Salary Sacrifice: when you agree to exchange part of your salary for non-cash benefits from your employer, such as pension contributions or childcare. Also known as salary exchange.

Small Schemes Solutions: specifically designed for companies with up to 50 employees and offering competitive rates and benefits normally only available to much larger companies.

Private Medical Insurance (PMI)

Acute Episode: a period of time when an injury is at its worst, normally right after it has occurred or flared up.

Chronic Condition: a condition that in most cases cannot be cured, only controlled, and is often lifelong.

Company Medical Insurance: an employee benefit whereby private healthcare is paid for by the business. Also known as Business Medical Insurance or Group/Corporate Healthcare.

Continuous Personal Medical Exclusion: a type of underwriting designed for people who have a fully underwritten health insurance policy and would like to switch providers.

Day Patient: a patient using the services of a hospital during the day and who does not stay the night there.

Fee Assured: where the insurance company has placed limits on how much money they will pay out for individual claims.

Group Dental Insurance: cover that supports employees and their families in managing the cost of essential and routine NHS dental treatment. It can also contribute towards more expensive or private treatment. Also known as Corporate Dental Insurance.

Inpatient: a patient who stays in hospital while receiving treatment.

Medical History Disregarded (MHD): a type of underwriting, usually applied to larger group schemes where pre-existing medical conditions are included.

Moratorium Underwriting: an underwriting option that doesn’t require individuals to disclose their full medical history, as all pre-existing conditions from the past five years are excluded for a set period.

Optical Insurance: supports payment for glasses, contact lenses and eye tests. It also normally pays out a lump sum if sight is permanently lost.

Outpatient: a patient that is not hospitalised overnight but who visits a hospital or clinic for treatment or diagnosis.

Private Medical Insurance: cover taken out and paid for by an individual, which is designed to provide funds for the cost of private medical treatment.

Risk

Beneficiary: a person named in a life insurance policy who will receive the death benefit.

Critical Illness: a pre-specified serious illness or injury, which will usually cause temporary or permanent incapacitation of the individual.

Expression of Wish: a document that provides guidance to scheme trustees/administrators as to who to consider as recipients of the death benefits.

Free Cover Level: the amount of cover an individual policy member can have without any underwriting or medical evidence. Also known as Automatic Acceptance Level.

Group Income Protection (GIP): pays a percentage of an employee’s salary as a regular income, if they can’t work due to injury or long-term illness.

Group Life Assurance: cover that pays out a tax-free lump sum to an employee’s beneficiaries, should they die. Also known as Death in Service.

Level Term: an insurance policy that has a sum insured which is fixed throughout the term.

Non-Medical Limit (NML): the total benefit an insurer will permit, without the need for medical underwriting. Also known as Automatic Acceptance Limit (AAL).

Relevant Life Assurance: an individual life assurance cover that pays a tax-free lump sum benefit if the person covered dies or is diagnosed with a terminal illness during their employment. Also known as Relevant Life Cover.

Single Event: one originating cause, event or occurrence, or a series of related originating causes, events or occurrences, resulting in four or more deaths, irrespective of when or where they occur.

Terminal Illness: any illness, which, in the view of medical professionals will not be recovered from and will result in the death of an individual.

Pensions

Adjusted Income: your total income, including basic salary, bonus, investment income, rental income etc. as well as employer pension contributions received in a tax year. It is usually relevant to assess whether the tapered allowance applies.

Annual Allowance: the most that can be contributed to a pension scheme in a tax year. The allowance is £40,000 p.a. but reduces for those impacted by the tapered and money purchase annual allowances.

Annual Management Charge: a yearly charge taken by the pension provider for running the pension scheme. It is usually expressed as a percentage of the value of the scheme.

Auto-enrolment: a Government initiative that was created to help more people save for retirement through a work pension scheme.

Default Fund: employers select a fund where all employees will automatically have their contributions invested, unless they make a choice with the pension provider directly.

Defined Benefit: a pension that doesn’t depend on investments, but instead is based on salary and how long you’ve worked for the employer.

Defined Contribution: a pension based on how much money has been paid into it. Also known as a Money Purchase pension.

Lifetime Allowance: a limit on the amount of pension benefit that can be taken from pension schemes and that can be paid without an extra tax charge.

Money Purchase Annual Allowance: where the usual annual allowance of £40,000 p.a. is reduced to £4,000 and can be triggered by taking money out of a pension scheme.

Personal Pension: a pot of money into which you and/or your employer contributes and is used to provide you with an income or lump sum in your later years.

State Pension: a weekly payment from the UK Government once you reach State Pension Age.

Tapered Annual Allowance: when the annual allowance is reduced for individuals who have an adjusted income of over £240,000.

Workplace Pension: a pension scheme which is established by an employer and into which all eligible employees are automatically enrolled.

Business Protection

Key Person Insurance: covers against the loss of key individuals in a business which would result in financial loss. Also known as Key Man Insurance or Key Person Protection.

Renewable Term: level term assurance that also has the flexibility to renew the policy regardless of your health at the point of renewal.

Shareholder Protection: a policy that provides a lump sum if a shareholder dies or becomes critically ill, so the surviving shareholders can buy back the deceased’s stake in the company.

Wellbeing

Absenteeism: when an employee is regularly absent from work without any reason.

Cash Plan: an insurance policy designed to help cover against the cost of everyday healthcare expenses, such as dental treatments and check-ups.

Cycle to Work Scheme: a Government tax exemption initiative introduced to promote healthier journeys to work and reduce pollution.

Employee Assistance Programme (EAP): an employee benefit that provides support for personal and work-related issues.

Mental Health First Aider: a trained person in the workplace with whom staff can speak in order to seek support with mental health issues.

Presenteeism: the practice of attending work despite illness, mental health issues, injury etc., which often results in lower productivity.

Wellbeing: how someone feels about various parts of their life, including their work, health, relationships and other aspects.

Workplace Wellbeing: relates to all aspects of life at work, from the physical safety of the workplace to how employees feel about work and their working environments. Also known as Employee Wellbeing.

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