Staff Absence Insurance – Unlocking Potential Budget Savings

Staff Absence Costs can reduce the financial control and affect your business profits. Adopting a policy plan that lets you cover and prevent staff absences can come as a breather for institutions that are interested to save some cash.

HR Professionals always have their plate full of challenges.

One such area that baffled me during my corporate stint was the sudden absence of employees.

The reasons of absence are multiple but they all lead to one common outcome – “Loss”.

It can be monetary loss, business opportunity loss or considerable work loss.

Not to mention the worries of finding replacement staff or paying them for additional hours of engagement.

These things made me wonder if there is a solution to this perplexing issue? It turns out the answer can be Staff Absence Insurance.

The reasons of absence are multiple

A quite sought after proposition is the educational field including schools and colleges, Staff Absence Insurance awaits full fledged adoption in a company set up.

This mechanism ensures the absence management gets integrated with cost savings for the organization.

What is Staff Absence Insurance?

It is a payment made by an insurance service provider to the company/institution when the insured team members are absent due to any of the following reasons:

  • Accident resulting in sickness, permanent/temporary disablement or death
  • Maternity/Paternity Leave and Pregnancy related illnesses
  • Care for others
  • Bereavement and other stress outcomes (anxiety, depression and chronic fatigue)
  • Disciplinary Suspension
  • Stranded staff
  • Absence due to trade union duties or jury service
  • Parental and Adoption Leave
  • Phased returns of the employees before resuming full time working

Important Aspects Covered Under Staff Absence Insurance Policy Include:

  1. Categories of Staff to be covered
  1. Daily benefit to be received for each staff category
  1. The length of the excess for each staff category (The excess is the period before benefit payments will start and clients can generally choose an excess period from 0-25 days)
  1. The maximum benefit period for each staff category and each incidence of absence (up to 365 days)
  1. The level of stress cover required (clients can typically choose to cover the full benefit period, limit cover to 30 days or take no cover)
  1. Benefit payments for maternity, paternity and adoption leave

Most of the service providers offer comprehensive policy with flexibility to select and tailor the cover to meet specific needs of the organization with auto or manual renewal options.

Staff Absence Insurance: Entrepreneur Advantage

Whether it is full time or part time staff, the organization suffers from increased incidences of employee absence over and above the paid leave.

With a solution like absence insurance the employer can enjoy the following benefits:

Budget Protection

The scheme allows the firm to retain control over its staff absence budget.

By calculating an average budget based on previous years’ absence costs, the insurance companies provide protection against overspending, removing concern about costs for long-term or increased levels of absence

Peace of mind

Leave of absence from work becomes a pain when you start losing out on budget due to unplanned and unaccounted employee time-offs.

With an insurance arrangement, employer can be at ease that the costs are covered if the organization experiences higher absence levels than anticipated.

Some policies enable you to buy cover for a much smaller premium and protect your absence budget from being exhausted.

A good staff absence insurance policy provides a “safety net” against financial loss due to unprecedented employee absence.

A good absence insurance policy should:

  • Provide a simple, understandable and efficient policy
  • Include transparent benefits with no hidden clauses
  • Offer a fresh and customized approach that is tailored to suit the budget provisions of the firm
  • Be flexible enough to cover all eventualities by being extensive
  • Cover the claim without engaging locum or replacement staff
  • Be cost-effective solution with any twisted or complex interpretations of the wellbeing package
  • Allow the firm to maintain financial control with budget certainty

According to the U.S. Department of Labor, companies lose approximately 2.8 million workdays a year because of employee injuries and illnesses. To prevent such colossal cost from hitting the business, choosing a good absence insurance policy is critical. The market is flooded with service providers offering the best of best policies and hence the decision should be based on certain relevant factors.

Specific considerations for employers before finalizing the insurance policy:

Look out for conditions apply

Certain suppliers provide the absence insurance service as add on service if you buy their core package of HR service.

In such scenario, weigh the pros/cons and feasibility of taking the entire package in comparison to stand-alone offering

Ensure extra features

A good policy offers its members additional benefits along with the regular features.

Negotiate and opt for policy that lets you cover non-sickness related absences like accident, bereavement, maternity, jury service, paternity and adoption.

Many service providers go an extra mile to accommodate things like counseling helpline, stress relief toolkit, medical treatment and rehabilitation

Pick your package wisely

Look at your past leave of absence history along with unexpected time-offs before finalizing the daily benefit amount, full time equivalent, staff to be covered and waiting day period.

Also, service providers usually offer standard and premium packages as well as annual/renewable cover with variations in benefits and coverage.

You should choose the one that suits your needs and frees the budget for things that you actually would like to do for your organization


Avoid premium surcharges

It is better to go for schemes that have a capped payment system that avoids the possibility of premium surcharges.

In this case if the level of demand in any firm exceeds the funds available, payments to organization are reduced proportionately.

Staff absence insurance is a crucial area of employer intervention if the absence related expenses are to be controlled.

Therefore, it is imperative that the insurance package brings best value by realistic risk assessment and non-compromised protection cover.

It is imperative that the insurance package brings best value

Don’t let absenteeism stump you out.

Be at top of employee time-off requests anywhere and anytime with our engaging leave management solution. Visit for more details!



Mitalee Chhatre, a true professional with over 5 years of corporate experience in Human Resources and Health Sector. Contributor on CakeHR where tracks the newest trends and practices of the work-life world.

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Written By

Mitalee Chhatre

Mitalee, a true professional with over 5 years of corporate experience in Human Resources and Health Sector. Contributor on CakeHR where tracks the newest trends and practices of the work-life world.