2 Types of Insurance Benefits to Provide Employees in Saudi Arabia

All things being equal, an employee deciding between a company that offers insurance and another that doesn’t will prefer the former over the latter. Why?

Insurance is a key employee benefit. Its presence or absence can induce an employee to sign, stay, or resign.

There are others. Pay, paid leaves, and professional development also influence employee attraction and retention. If everything else is the same, however, businesses in the Kingdom of Saudi Arabia must understand that insurance benefits matter.

This is why you must provide employee health insurance and consider getting corporate group life insurance in the KSA.

What Is Insurance?

Insurance is financial protection against something bad occurring. Health insurance provides a buffer against expensive medical bills, while life insurance protects against financial ruin in case of a breadwinner’s sudden death.

An insurance policy is a contract between the insurer and the policy owner. It obliges the former to provide a benefit or an agreed-upon amount to the latter or the contract’s named beneficiary if the unexpected and unwanted happens.

Insurance contracts typically indicate the financial settlement or, if variable, how it’s computed. They also state the name of the beneficiary (if different from the policy owner) and the payment terms and conditions. They’re clear on the specific qualifying conditions and exceptions as well as the premiums the policy owner must pay.

The characteristics of insurance policies and plans vary depending on type, company size, premiums, and many other factors. Below is a discussion of two types of insurance that employers in Saudi Arabia usually incorporate into their employee benefits packages.

Health Insurance

Employee health insurance is compulsory in Saudi Arabia. You can provide comprehensive and extensive health coverage to increase your appeal to employees.

Insurers in the KSA offer group health insurance plans. Be sure to inquire about these with your preferred insurance company. Corporate health coverage packages offer great value, as they provide more benefits and inclusions for the money than individual plans.

Why It’s Important

You need it for compliance. The law compels you to provide your employees and their eligible dependents with health coverage. Refusal to do so means fines and penalties.

How much is the fine? It can be equivalent to the annual subscription of every individual you did not provide with health coverage.

Rectifying non-compliance can be expensive. Since you must also pay all the insurance premiums you did not remit, failure to provide employee health insurance can cost up to twice as much as the premiums you would have paid.

Additionally, if you’re found guilty of violating the insurance mandate, you may get banned from hiring new employees. The ban may be temporary or permanent. Either way, it will restrict your growth.

Health Insurance Coverage

The health insurance coverage depends on the plan you procured for your employees. You can ask your insurance provider to create customized plans for your organization.

You can tailor policy benefit limits and inclusions to your needs. Minimum coverage requirements depend on company size. For instance, whereas the basic policy for small and medium enterprises (SMEs) may have a maximum benefit limit of SAR 500,000, large companies may provide a higher limit of SAR 1,000,000.

Typical health insurance plans pay for (or subsidize) the cost of:

• Hospitalization

• Dental treatment

• Medicines

• Mental health care

• Obesity treatment

• Homecare

• Telemedicine services

• Outpatient medical care

Health insurance plans for employees usually require co-payments for or impose maximum benefit limits on certain procedures and treatments.

Some companies go above and beyond, providing add-on services their clients’ employees can enjoy, including:

• Medical refill services

• Second opinion

• Doctor chat/phone/video consultations

• International medical care

By working with an insurer that provides value-added services, you can improve employee well-being. This also allows you to increase your employees’ satisfaction with their insurance benefit inclusions without increasing your health coverage costs.

Life Insurance

Unlike health insurance, employee life insurance is not mandatory. Offering this benefit, however, can make you stand out and be more attractive to employees.

Life insurance plans can be term, whole life, or variable.

Term insurance provides coverage for one year, five years, or any fixed term, thus, its name. The period is usually one year in group plans, and the company simply renews the group policy every year.

Whole life insurance comes with lifetime coverage as long as premiums are paid and allows employees to save money through their policy’s cash value. Depending on the terms, employees may even be allowed to bring their policies with them if they change employers.

Variable life insurance plans are linked to investment accounts. This may accelerate the growth of the cash value component.

Why It’s Important

Life insurance is valuable to employees because it lets them provide for their dependents in case of their untimely death. The proceeds from a life insurance policy can give their families enough to live on while they come to terms with the emotional toll of losing a loved one and the financial gap a breadwinner’s death leaves behind.

Life Insurance Inclusions

The death benefit is the primary inclusion. This is the amount the policy beneficiary will receive if the employee dies. Group life insurance may also provide an accidental death benefit. The insurer pays this if an employee dies due to an accident.

Corporate life insurance policies may have permanent or temporary disability benefits for partial and total disability caused by sickness or accidents. Some cover medical expenses incurred because of accidents, while others have special terms for terminal illnesses.

Employee Insurance in the KSA

Health insurance is a legal requirement among Saudi Arabia’s employers. Life insurance is optional, but it’s a good idea to include it in your employee benefits package.

Discuss your employee insurance needs with your preferred insurer. Make sure you’ll get one group life and health policies tailored to your organization’s specific requirements.