Will Death in Service Insurance Affect My Employees’ Personal Life Cover?
How Group Life Insurance Works With Personal Policies
It’s very common for employees to already have personal Life Insurance before a business sets up a Death in Service scheme for them.
Group Life Insurance tends to be limited to a multiple of salary, for example three or four times an individual’s gross annual earnings.
While it’s a great benefit, it may not always be sufficient – which is why many employees choose to “top up” their company payout with a personal policy.
Death in Service is linked to the company. That means when employees move on, company-provided Death in Service Cover ceases. This is another reason why many employees choose to have some element of personal Life Insurance – independent of work.
What Are The Maximum Payout Limits On Life Insurance?
For a Death in Service scheme, the typical limit is 10x an employee’s salary, or up to £1.5 million (depending on the insurer).
For personal Life Insurance, limits will be insurer-dependent. However, most insurers don’t have a specific threshold. The amount of Life Insurance is based on an “insurable interest” test or affordability test.
Will Employees Have Trouble Getting Personal Cover?
Insurers are usually happy to cover people with a combined total sum insured across all Life Insurance policies of £1 million.
After this, insurers may begin asking financial questions to determine whether the life cover employees hold is excessive. This said, if the sums can be justified, there’s not usually a need to be concerned with this additional administrative step.
On an individual policy, employees may be asked how much Life Insurance they already have in place, in which case they’d have to mention their Death in Service scheme.
However, if the Group Life Insurance scheme was set up after the personal Life Insurance scheme, they won’t usually need to contact their personal insurer to let them know.
Need Help Setting Up Group Life Insurance?
Setting up and maintaining your company benefits can be a bit of a headache. But that’s where our fantastic team of specialist advisers step in. We can take the workload off your desk and ensure your benefits are set up properly.
We help businesses of all sizes across the UK set up their benefits (including Death in Service), making sure they have the right policies for their staff at the most suitable price.
Get in touch by calling 02074425880 or emailing help@drewberry.co.uk.
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