Everything you need to know about company death and disability insurance

Company death and disability insurance (prévoyance entreprise) allows all staff to benefit from coverage that goes beyond social security, protecting them in the event of work incapacity, disability or death. It is up to the business owner to determine which guarantees to select for an effective and protective company death and disability insurance contract.

What is group employee protection insurance?

The rules governing company death and disability insurance are defined under law n° 2013-504 of 14 June 2013 on job security, also known as the ANI law.

Group employee protection insurance in the company — more commonly called company death and disability insurance — refers to the collective insurance schemes that employers must set up for the benefit of their employees. The goal is to allow them to be covered in addition to mandatory health insurance in the event of work incapacity, disability or death. This can also be referred to as a “healthcare expenses” protection scheme or group health plan.

The aim is to cover as much as possible of the healthcare costs remaining after reimbursement by social security. Company death and disability insurance prevents the employee from falling into financial hardship following an accident or serious illness.

Staff categories covered by company death and disability insurance

Any employee can be covered by group employee protection insurance, regardless of the nature of their employment contract, age, health status or income. The business owner can include all employees, but has some latitude to exclude certain categories. The selection criteria are defined by the mandatory health insurance code.

The benefits of company death and disability insurance for employees

Company death and disability insurance allows the employee and their family to cope with life’s unforeseen events, particularly in the event of serious illness, disability or death.

The benefits are numerous for employees.

• The company covers part of the contribution.
• The portion of contributions remaining payable by the employee is deductible from the amount declared for income tax purposes.
• Since the insurance covers all staff, the collective nature makes it possible to obtain significant coverage at a lower cost compared with individual insurance.
• The company handles the paperwork and contract follow-up, freeing the employee from administrative hassle.

What steps must the employer take?

The employer has three procedures available for setting up company death and disability insurance.

1 — The collective bargaining agreement or industry agreement

An industry sector may define the type of company death and disability insurance that the employer must set up. In this case, the provisions have already been negotiated by the social partners to determine the guarantees and contribution rates. Check the official government website to find out about the provisions for your industry sector regarding company death and disability insurance.

If the industry sector does not include this agreement, a company- or establishment-level collective agreement can be negotiated together with the social partners.

2 — The DUE — Unilateral Employer Decision

The employer is entitled to unilaterally define the terms of company death and disability insurance through a DUE (Décision Unilatérale de l’Employeur). However, it must include all the mandatory clauses required by the mandatory health insurance code.

The business owner must inform each employee individually and in writing, specifying the name of the insurer, the contribution rate, the employer’s contribution rate and the details of the guarantees.

3 — The referendum

The employer can hold a referendum. After choosing an insurer and determining the terms of company death and disability insurance, the contract is put to a vote among employees, after informing them of its contents.

The company death and disability insurance contract must be adopted by a majority of registered voters.

The company’s obligations

The law defines four criteria for mandatory protection coverage.

1 — Group supplementary health coverage under the ANI law

The ANI law requires business owners to set up group supplementary health coverage for all their staff.

The obligations are as follows:

• the employer must cover at least half of the contribution amount;
• minimum guaranteed benefits with a basic care package;
• implementation through a legal act using one of the three procedures described above (collective agreement, DUE or referendum);
• exemption from social security contributions for the portion of contributions paid by the employer;
• income tax deductibility for the portion of contributions paid by the employee.

2 — Payment of daily benefits in the event of work incapacity

The calculation of the amount of daily benefits is defined in the 1978 monthly-pay law (Article L1226-1 of the French Labour Code):

• the employer must supplement social security benefits from the eighth day of work incapacity, provided the employee has one year of seniority;
• benefits cover 90% of salary during the first half of the scheduled payment period;
• during the second half of the scheduled payment period, benefits represent 66.66% of salary.

The duration of salary maintenance is limited and depends on the employee’s seniority.

3 — Company death and disability insurance for managers and equivalent staff

Company death and disability insurance for managers and equivalent staff is mandatory under the following three criteria:

• managers must benefit from a protection scheme with a contribution rate of no less than 1.50% of tier 1 of gross salaries (tier 1 was equal to €3,428 per month in 2021);
• the employer bears the entire 1.50% tier 1 contribution;
• the scheme primarily guarantees death benefit coverage.

4 — Portability of rights after termination of the employment contract

When the employment contract ends, the employee remains covered by group employee protection insurance for free during a set period, provided they are covered by unemployment insurance and have not committed gross misconduct. The details of this portability must be stated in the certificate of employment given to the employee.

Steps for setting up a company death and disability insurance contract

The employer follows four steps to set up a company death and disability insurance contract.

1 — The preliminary step

The employer finds out about the benefits provided by mandatory health insurance. They then check the legal and collective bargaining obligations relevant to their business sector.

2 — The content of the group company protection contract

Next, it is necessary to determine the type of guarantees to include in the contract and set the level of each one. The final step is to select the staff categories that will benefit from it.

The business owner decides on the funding method, notably determining the split between the company’s contribution and the employee’s contribution.

3 — Choosing the insurer

There are many potential insurers, which should prompt the employer to launch a call for tenders to compare them and select the one offering the best value for money.

4 — Signing the protection insurance contract

The conclusion and signing of the company death and disability insurance contract results in the drafting of a legal document.

Finally, the employer provides all information documents to employees.