“Should we give a pay rise instead, or put group insurance into the package?” – this question comes up before almost every rollout, and it is entirely fair. The comparison below is deliberately free of tax rates and forint amounts: it shows direction, while the company-specific calculation is joint work with your accountant.
Why are the two not the same?
With a pay rise, deductions and employer charges sit between the company's total cost and the amount landing in the employee's pocket. With group insurance, the company pays a premium and the employee receives protection: a fixed-sum payout in the event of an accident, hospital treatment or a critical illness. The tax treatment depends on the structure – the big picture is drawn in our base article on taxation – but the direction under the current rules is typically that the level of public charges on the benefit form can be more favourable than on salary.
A thought experiment – an illustration, not an offer and not tax advice
Imagine two identical budgets: the members of team A receive a pay rise, while for team B group insurance is taken out at the same annual total cost. In team A, a noticeable part of the budget covers the public charges, and the remainder is built into net pay – at monthly level often as a barely visible item. In team B, a larger share of the budget can typically go towards the cover itself, and if trouble comes, the payout can exceed the annual premium by orders of magnitude. This comparison is purely an illustration: no tax rates, only proportions – your accountant can put your own numbers next to it. The lesson is not that the benefit is “better”, but that it is different: salary provides income, insurance provides a safety net – and the right ratio between the two is different for every company.
When is the pay rise still the better choice?
Honestly: often. If the team is lagging behind the salary market, that has to be fixed first. If employees explicitly expect income, the gesture of a benefit can misfire. Salary, moreover, is freely spendable, builds into base pay and into salary-linked elements, and needs no explanation. The value of group insurance comes through when the team understands what it received – that is the subject of our article on retention and recruiting. And there is a timing angle too: taking back a pay rise is hardly workable in practice, while the terms of a benefit programme can be retuned at each anniversary – extended if it works well, refined if the team needs something else.
Decision criteria on one page
- Goal: settling income levels, or care and retention?
- Employee preference: ask the team – the answers are often surprising.
- Visibility: salary shows up every month; insurance shows itself in trouble.
- Administration: a pay rise is simple; an insurance rollout is also easy to organise – the Packages page shows the kind of budgets you can think in.
- Combination: the two tools do not exclude each other – a more moderate pay rise can be paired with targeted protection.
The numerical comparison is always best prepared with your own payroll data and your accountant – we add the structure and the insurance side.
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