Group Life Insurance (also known as Death in Service Insurance) is a key employee benefit that provides employees with a level of company paid life cover.
It provides financial support through a tax-free cash lump sum often equivalent to 2-4 times an employee’s basic salary.
Only 36.7% of people have some form of Life Insurance, making a group life scheme an invaluable benefit.
In a tight labour market – unemployment remains at or near record lows – employee retention is more important than ever.
Employees consider Life Cover one of the top 5 employee benefits they’d like to see and it’s also one of the simplest employee benefits to implement.
Unsurprisingly, it’s often the first step employers take to improve workplace morale.
For employers, an employee Life Insurance scheme has the potential to improve the quality of the business.
An impressive employee benefits package can:
Here’s why Profile Pensions chose Drewberry to help with their Group Life Insurance and what it meant for their workers…
“Getting Group Life Insurance was a no-brainer. Our employees get comfort from knowing it’s there and we’re proud to provide that. We work hard to provide good benefits to our staff and show a commitment to our employees, so introducing an employee benefit was really a logical step.”
HR and Office Manager at Profile Pensions
In 2018, 42% of people without Life Insurance didn’t have it because it was too expensive. Having an employer provide them with a policy may be a load off many employees’ shoulders.
Life cover is a very valuable form of protection, especially if you have loved ones that you support with your salary.
Having Death in Service lets employees know their loved ones are taken care of financially if they died without having to pay a penny for the cover.
To add employees to a group policy, they must meet some common minimum requirements:
Some employers add additional terms before including employees in policies, such as working for the company for a set period or being above a certain pay grade / status within the company.
There is also a minimum number of employees that you need to set up a group insurance scheme.
This number can vary between insurers, but many ask for a minimum of five people.
For businesses with fewer than 5 employees, all members would likely need to be medically underwritten. Setting up a group scheme of this size may therefore be overkill.
For micro businesses it often makes more sense to consider Relevant Life Insurance, where each employee has their own individual cover but still receives the same tax benefits as a group scheme.
Relevant Life, which is popular with Contractors, is a form of life cover an employer provides for a single employee. The employer puts the policy into a specific trust to benefit from the same tax efficiencies one receives with a group scheme.
In addition to this, some Relevant Life providers allow your workers to keep their plan by moving it to a personal life insurance policy if they choose to leave the company.
The cost of a Death In Service scheme will vary depending on the demographic you’re trying to insure. To get an accurate quote, you will need to provide information on every employee that you would like to include under the policy.
Details that will affect the cost of a policy include:
It may seem like a lot of information to get Group Life Insurance quotes, but we really do need it because there are many different factors which affect the cost of policies. However, to preserve anonymity during the quote stage you don’t have to give names.
Group Life Insurance is one of the cheaper employee benefits you can offer your workers, with many employers being surprised at how little it can cost.
This is especially the case for larger schemes, where the risk of an individual passing away is less concentrated and so premiums are usually lower.
Employee Benefits Consultant at Drewberry
The below table contains the price of a Group Life policy of 10 employees based in London. The business is a software development firm and all of its workers are office-based administrators who are covered for:
Average Cost per Employee per Month
Total Cost per Month
The below table contains the price for a Group Life Insurance scheme of more than 200 employees based in Barnsley. The business is a hospital services organisation with staff involved in a range of activities from healthcare services to administration. Employees are covered for:
Average Cost per Employee per Month
Total Monthly Cost
Total Annual Cost
As you can see, the cost can vary considerably depending on a number of different metrics, which is why it’s so important to discuss your company’s needs with an expert, independent adviser such as Drewberry. That way, you can be sure you’re getting the best deal from across the entire UK market.
Step 1 :: Decide on your policy requirements
Before you begin, you should have an understanding of just what it is you want to achieve with your policy.
You’ll have decided on factors such as:
Step 2 :: Go to market to get quotes from the UK’s best insurers
This involves visiting all the UK’s major Group Life Insurance providers to find the best deal for your company and your employees.
There are many companies to choose from and not all are geared up to provide quotes to companies on an individual basis; some only work through firms such as Drewberry to offer access to exclusive deals.
You can’t usually get Group Life Insurance quotes online because of the volume of employee data required for the insurer to price your scheme accurately.
As such, you’ll typically have to manually send the information to each individual insurer to get quotes. It’s why many firms leave it to us to do their heavy lifting.
Head of Employee Benefits at Drewberry
Step 3 :: Apply for the policy and carefully review the terms
Once you’ve decided on the level of cover and chosen your insurer, it’s time to apply for group policy.
Make sure you read the terms carefully before making a final decision — you want to ensure you’ve ticked all the boxes from Step 1 so that it meets your requirements.
It’s at this point you should also consider setting up the appropriate trust for the benefit to be paid into should one of your employees unfortunately pass away. This is a complicated area and generally requires expert advice.
Step 4 :: Finalise the application, set up the trust, put the policy live and pay premiums
The final step is the most administration-intensive. This can involve a lot of paperwork if you’re going it alone! Fortunately, Drewberry does this day in, day out for our clients and can have all the admin done in a jiffy so you don’t have to worry about it.
Once you’re happy with the application, it’s time to set the policy live. This involves setting up the facility to regularly pay premiums, as well as making sure the policy has the appropriate trust set up alongside it to receive the benefit.
Life insurance for employees is generally considered a business expense, so premiums are typically eligible for corporation tax relief.
It’s also not usually a P11D or a Benefit in Kind for employees – which means there won’t be any additional income tax your employees will have to pay as a result of being covered.
Although you as the employer owns the plan, you write it into trust for the employee’s family. This means, in the event of a claim, the benefit goes into a discretionary trust set up alongside the policy, therefore sidestepping any inheritance tax issues on the payout.
There are two ways to set up a Group Life Insurance trust: you can do this yourself as a business or use what’s know as the insurer’s ‘master trust’.
Most insurers already have so-called ‘master trusts’ in place. These are already set up for you to use and means there’s no need for you to set up a trust of your own.
The administration of the trust, including reporting to HMRC, is taken care of by independent scheme trustees.
As this is a less bespoke option, it’s recommended you seek the appropriate legal advice before participating in a master trust to ensure it’s right for your company.
Being independent we have access to all the top UK insurers. We do all the heavy lifting comparing quotes from the providers detailed below and will send you a personalised recommendation report summarising our research.
Aviva was formed from the merger of Norwich Union and CGU PLC in 2000, but can trace its roots back to 1696.
The Aviva Group Life cover allows employee to also protect their spouse or partner through the scheme. As part of their cover, employees get access to an employee assistance program, offering discounted gym memberships and 24-hour stress counselling helplines.
Canada Life is a Canadian company that offers life, health, and disability insurance for groups and individuals. It paid 99.7% of Group Life claims in 2016.
Employees’ families get access to bereavement and probate helplines after the death of their loved one.
AIG took over Ellipse — which was a relatively new provider, founded in 2009 — in December 2018. This married Ellipse’s bespoke group insurance protection with the backing of international insurance giant AIG.
AIG’s Death In Service benefits include an online nomination of beneficiary form and online medical underwriting, which can help speed up the application process.
Legal & General is one of the oldest and most recognisable insurance brands in the UK, founded in 1836. The insurer paid 97% of group claims in 2016.
Legal & General includes an extensive Employee Assistance Program.
The Metropolitan Life Insurance Company is better known as MetLife. Based in New York, MetLife is among the largest global providers of insurance, annuities, and employee benefit programs.
MetLife’s policy comes with a free bereavement and probate support for employees and their families. It also makes up to six face-to-face bereavement counselling sessions available.
The Unum Group was created by the 1999 merger of Unum Corporation and The Provident Companies. Today, it has three distinct business arms: Unum US, Unum UK, and Colonial Life.
Unum Group Life policies offer a multiple of between 1x and 12x salary, up to the free cover limit.
We understand the ins and outs of the group insurance market having strong relationships with the UK providers and an in-depth knowledge of the insurers terms and conditions.
We are here to help make sure your Group Life Insurance is set-up in the most appropriate way whilst obtaining the most competitive premium.
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.
If you are looking to implement a company scheme or review an existing arrangement, we are in a great position to help you.
Please don’t hesitate to pop us a call on 02084327333 or email firstname.lastname@example.org.
Director at Drewberry
Martyn Coates from Drewberry provided an excellent service with prompt handling of any question that we asked him. I would highly recommend Drewberry for anyone wanting Insurance.