With the economy showing little sign of an upturn and spare money thin on the ground, cost-effective cash plans are the most sought-after employee benefit. Nicola Culley examines this rapidly growing market and ponders its longevity
He added: “It is one of those things that some advisers do and some do not. If it became routine part of the market then buying the cash plan and excess form
the same insurer is something that would need to be looked at.”
Easy to educate
On educating consumers about cash plans, adviser Maggie Norris at advice firm April UK, said client conversations about cash plans were very easy. She said clients could quite easily see the benefits of them which was predominantly down to the fact they knew they would use them – as opposed to other more abstract forms of cover which may never pay out.
Norris said: “Insurance is not a tangible concept so that is why cash plans can be quite appealing. We always do a full review and perhaps clients may not have heard of them before but once we start talking about claiming on glasses for example, and things they will definitely see the benefit of, they are really interested.
“But people are not necessarily familiar with them in the beginning and you do have to explain it as an option. They are affordable and give clients something back for what they pay so I think it might be good to do more marketing and promotion of them to increase take-up.”
She said there was a lot more reception from corporate clients now about the lower-cost cash plan alternative. She explained that once companies had benefits in place it was extremely difficult to remove them; for example to shave outgoings in times of economic crisis.
With a cash plan, Norris said, companies could keep benefits but budget easier which was a very appealing proposition.
Price hikes unlikely
She added: “And cash plans are also less likely to be subject to price hikes like other forms of group benefits. With the economy the way it is cash plans are a much less expensive way to offer a benefits package to staff. People are looking for alternatives.
“There are different levels of cash plans as well so you can get very good value products or more budget ones. And I think they will stay this way even if the market bounces back and cost becomes less of an issue with companies.”
Perhaps when the economy lifts, she said, cash plan benefits could be enhanced to offer more holistic options.
Norris said she had noted a “definite” rise in cash plan take-up as more clients re-evaluated benefits packages since auto-enrolment kicked off. She added those types of client conversations were noticeably more frequent.
“If I present a cash plan to a company now there is a good chance they will take it up,” she added.
With auto-enrolment proving a positive driving force for cash plan take up - that is only set to increase as the roll out continues – and the economy lagging in the way it is, the future is bright for the low-cost, tangible product area.
For the near future at least, the growth story for cash plans shows no signs of turning tail.
