Employee Benefits – Life Insurance
You’ve carefully prepared your resume and researched the company and hiring manager before crafting the perfect cover letter. You hold your breath, hit the send button and then you wait. After what seems like an eternity, you get an email asking you to come in for an interview – this is good.
You put on your Sunday best and practice your firmest handshake. The interview is long but for you it seemed like it was over in a flash; the good news is that you got the job.
At this point, what usually happens is that employers will send you an employment contract and some paperwork. Buried within that pile of paperwork would be some documents that outline your employee benefits. That is if you’re lucky enough to have any. In Hong Kong, employers are only required to provide you with EC insurance which pays if you’re injured on the job.
We write a lot of content from an employer’s prospective but this time, we wanted to write something for the employees and job seekers out there. In a 3 part series, we’ll be going over 3 types of employee benefits: health insurance, disability insurance and life insurance.
Here are some things to keep in mind when evaluating a job offer’s life insurance clause(s).
Does it cover me or the company?
Many companies will purchase life insurance for their key employees. This is to protect the business against financial losses when a key employee dies or becomes seriously disabled. In these, the insurance is made payable to the company and not the employee.
As you can imagine, this is an important point to clarify. Is the life insurance being purchased for you or for the company? Many companies who offer life insurance will carry 2 policies, one for the company and one for you.
While Hong Kong’s EC Ordinance prevents companies from deducting Employee’s Compensation premiums from your paycheque, the same rule does not apply to life insurance premiums if they are providing it as part of your group benefits plan.
While the group rates are usually quite good, it is something to pay attention to.
How much does it cover?
Most employer-purchased life insurance policies in Hong Kong will only cover you for 36 months’ salary. Depending on your income level, savings, lifestyle, or family situation, this may not be enough. I would actually argue that it isn’t enough for 90% of people working in Hong Kong (especially if you have a family to support).
If this is the case, it would make sense to consider purchasing your own life insurance policy outside of work to top up the coverage.
Are there any restrictions on coverage?
Hong Kong is an always-on city full of hustle and bustle. But it’s not all work and no play. Many Hong Kongers live very active lifestyles and partake in different kinds of sports. In light of this, you should check your life insurance coverage to see if there are restrictions on certain hazardous sports like scuba diving or skydiving.
Many of those might not be covered and require special exceptions not available through your employee benefits life insurance package. You’ll need to purchase a more specialized life insurance policy separately.
Other important considerations.
Another important thing to keep in mind is that with life insurance bundled into your employee benefits package, you lose protection when you leave the company. While this might not seem like an important factor right now, studies show that about 43% of Hong Kongers are looking to switch jobs this year.
Leaving your employer means losing your coverage. If you decide to purchase life insurance at this point, you may need to complete a medical exam and qualify all over again. Depending on your age and medical status, you might not qualify for coverage the second time around.
For this reason, it’s important to purchase life insurance for yourself early and keeping it in force so you know you and your family are protected should the worst come to pass.
If you have any questions about how to increase your level of protection or need help decoding the life insurance coverage your employer is providing, get in touch with an insurance advisor. We’ll be happy to help.