Answered by Michael Englefield
Many people wonder how Group Life Insurance is taxed, so it’s a good question to bring up!
Group Life Insurance – also known as Death in Service Insurance – is a popular employee benefit and often one of the first to be introduced by an employer. It’s a fairly simple tax efficient benefit which offers your employees and their loved ones peace of mind by providing a tax free cash lump sum should they pass away.
With Group Life Insurance you as the employer pay for your workers’ life cover. Usually, Business Life Insurance is eligible for corporation tax relief – so you might actually enjoy a lower tax bill for providing your employees with cover.
For employees, the good news is that generally Group Life Insurance is not a taxable benefit in kind (P11d Benefit) – which means there is no income tax to pay on the cover provided.
Also, Group Life cover is usually written into trust, which means the payout falls outside of the deceased’s estate for inheritance tax purposes. As a result, the beneficiaries won’t have to pay any inheritance tax on Death in Service payouts, either.
Frequently Asked Employee Benefits Questions
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The process to securing insurance was seamless and everyone involved from Drewberry along the way was very professional. Price options they presented were also competitive compared to my own research. Would definitely recommend them.
Very helpful and explained well the whole process of getting this insurance. Thank you.