It's possible that the contract with these employees requires 3 month notice period both ways. So, an immediate dismissal would require them to pay it in compen

It's possible that the contract with these employees requires 3 month notice period both ways. So, an immediate dismissal would require them to pay it in compensation (guess this would also depend on the legislation). Regarding the insurance, usually its already bought for a year or so, so they possibly let it run as there's no point in revoking it without getting a refund. If the 3-month notice is true and the compensation comes with that, then its still cheaper to let go now than in 3 months as there will be other costs like bonuses, expense claims for phone bills etc, other mandatory govt insurance schemes in some countries, more leave accrued. I'm not too convinced that it was all a nice gesture.