Big benefits for small business
As the owner of a small business, you can provide a benefits package that could make a big difference to you and your employees – without breaking your budget.
By Joe A. Salib
An attractive benefits package gives employees an incentive to join and stay with your company. Working with an insurance advisor, you can design a plan to meet your business needs with three employees or more. Different insurance companies offer a range of services and solutions to give you financial peace of mind and security.
The basic plan includes three benefits: Life Insurance, Accidental Death and Dismemberment Insurance and Dependent Life Insurance. You can tailor your plan to fit your need by adding at least one of these options to the basic plan: Extended Health Care, Dental Care, Critical Illness Insurance, Health Spending Accounts or Income Continuance (Short-Term and Long-Term Disability Insurance).
Benefit plan design includes a multitude of choices, such as:
• Coverage amounts for life insurance
• Non-evidence maximums for life and income continuance insurance
• Coverage levels and deductibles for drugs and
dental
• Waiting period for income continuance plans
It pays to work with ONE agent, who would develop the plan design and get quotations based on that same plan design. You can then compare the companies’ offerings and determine with your agent the most suitable plan for your needs. Working with more than one agent will not bring more quotes, as insurers will decline to quote twice for the same group. Furthermore, it is almost impossible to compare quotations based on different plan designs.
Specific challenges for small business:
1. If you are looking for your first group plan, you may want to set up a budget in the range of 3 to 5% of your payroll, depending on the benefits you want to include. You may want to start at the minimum level of benefits acceptable to you, until you build up your claim experience over a few years.
2. With a small group, you may have less flexibility in offering different benefits to different classes of employees. An agent who deals with individual and corporate issues may bring to you some creative solutions to complement the group plan.
3. If you already have a group plan, it pays to take it to the market every few years to make sure you are getting the best deal. Changes in employee demographics and your business environment may affect the competitiveness of different plans.
4. Remember: your agent represents you with the different insurers. You should be open with your agent and make sure they are providing the service you expect. Otherwise, you can appoint another agent without changing your benefit plan. A new fresh approach might help you make your plan more efficient.
What else?
Besides a group benefit plan, you may want to consider other benefits at no cost to your business:
Group retirement plans, such as group RRSP could be attractive to your employees. They can immediately see the tax benefit of their contributions in their pay cheques. The business has the option to offer matching contributions, should you decide to do so.
For larger groups, you may want to take advantage of financial education programs offered by your financial planner. Good programs are found valuable by the employees and help the business meet its obligations under the CAP (Capital Accumulation Plans) guidelines. These guidelines require plan sponsors to provide their group members with financial education and access to advice.
Joe A Salib is a Certified Financial Planner with Sun Life Financial in York Region. Joe offers group plans from different insurers. He can be reached at 416-407-0748. Email: joe.salib@sunlife.com
2600 John Street, Unit 207, Markham, ON L3R 3W3 T: 905.475.5222 F: 905.475.6369
