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Group Life Insurance

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What is Group Life Insurance?

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.

  • Pays a lump sum benefit should an employee die whilst in employment with your organisation.
  • The death doesn’t have to be at work or in the workplace to be eligible for a payout.
  • Is free from inheritance tax thanks to the trust structure set up alongside the policy.
  • Can provide vital support to an employee’s family at a very difficult time.
  • Additional benefits often include an Employee Assistance Program and Bereavement Service.

Do We Need Group Life Insurance?

Only 36.7% of people have some form of Life Insurance, making an Employee Life Insurance scheme an invaluable benefit.

The Benefits for Employers

According to Investors in People…

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:

  • Attract new employees
  • Improve employee retention
  • Improve employee engagement
  • Reduce stress and associated staff absenteeism.

Read Profile Pensions’ Client Story

Here’s why Profile Pensions chose Drewberry to help with their Group Life Insurance and what it meant for their workers…
Group Life Insurance Client Story

The Benefits for Employees

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 Employee Life Insurance lets employees know their loved ones are taken care of financially if they died without having to pay a penny for the cover.

📥   Guide to Group Life Insurance

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Can We Get Group Life Insurance?

To add employees to a Group Life Insurance scheme, they must meet some common minimum requirements:

  • They must be within the minimum and maximum entry ages of the policy
  • They must be eligible to work in the UK and have a UK working contract
  • They must be an active employee at the company providing the insurance scheme.

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.

Life Insurance for Micro Businesses

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.

Relevant Life Insurance

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 also known as Contractor Life Insuranceis 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.

Life Expectancy CalculatorA bit morbid we know, but this tool works out the risk of you passing away based on ONS Life Expectancy Data
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How Much Does Group Life Assurance Cost?

The cost of a group life assurance scheme will vary depending on the demographic you’re trying to insure. To get an accurate Group Life Insurance 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:

  • Employees’ salaries and the level of cover
    We need this to work out how much you want to insure each individual for and therefore price the policy accordingly.
  • Your industry and occupation 
    There are some occupations (e.g. manual work, working at heights or underwater) that are riskier than others, such as desk-based clerical jobs.
  • Employees’ ages 
    Older employees are more likely to claim on the policy.
  • The size of the group
    Although there are more lives to insure the bigger the group, insurers often offer a discount for larger group sizes.
  • Where employees are usually based for work
  • If employees are actively at work currently
    Those off on long-term sickness absence at the policy’s inception are unlikely to be covered.

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.

How is Group Life Insurance Taxed?

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.

Group Life Insurance Trusts

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’.

Employer Established Trusts

  • Step 1 – Execute a trust deed
    Insurers typically provide you with model trust deeds to use, but you may wish to refer this trust to your legal advisers. The policy cannot start prior to the execution of the trust deed.
  • Step 2 – Register the scheme administrator with HMRC
    The trust deed appoints a scheme administrator who will need to register as the administrator with HMRC. This can take a few days if the chosen scheme administrator has never previously registered as such with HMRC.
  • Step 3 – Register the scheme
    Once the administrator is appointed, it’s time to register the scheme with HMRC. This will provide you with a Pension Scheme Tax Reference Number, which will need to be attached to the executed trust to start the policy.

Master Trusts

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.

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Frequently Asked Group Life Insurance Questions

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    Compare Top 6 Group Life Insurance Quotes

    Being independent we have access to all the top UK insurers. We do all the heavy lifting comparing group life assurance quotes from the providers detailed below and will send you a personalised recommendation report summarising our research.

    aviva

    Aviva

    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.

    • Free cover limit: £5 million
    • Minimum lives: 5
    • Maximum cease age: 75
    • Master trust: Available
    canada life

    Canada Life

    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.

    • Free cover limit: £1.25 million
    • Minimum lives: 5
    • Maximum cease age: 75
    • Master trust: Available
    ellipse

    Ellipse

    Ellipse is a fairly new provider on the market, founded in 2009. However, it has since grown to insure more than 250,000 lives.

    Ellipse’s Group Life scheme includes an online nomination of beneficiary form and online medical underwriting, which can help speed up the application process.

    • Free cover limit: £1.25 million
    • Minimum lives: 2
    • Maximum cease age: 75
    • Master trust: Available
    legal & general

    Legal & General

    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 Group Life Insurance includes an extensive Employee Assistance Program.

    • Free cover limit: £5 million
    • Minimum lives: 10
    • Maximum cease age: 75
    • Master Trust: Available
    metlife

    MetLife

    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 Group Life Insurance 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.

    • Free cover limit: Determined by underwriting
    • Minimum lives: 2 members for policies with Flexible Benefits; 3 members for policies without Flexible Benefits
    • Maximum cease age: 75
    • Master trust: Available

    Unum

    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.

    • Free cover limit: £15 million
    • Minimum lives: 20
    • Maximum cease age: 75
    • Master trust: Available

    Expert Company Life Insurance Advice

    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.

    Why Speak to Us?

    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.

    • There is no fee for our service
    • We are independent and impartial
      Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
    • We’ve got bargaining power on our side
      This allows us to negotiate better premiums for you than you going direct yourself.
    • You’ll speak to a dedicated expert from start to finish
      You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
    • Benefit from our 5-star service
      We pride ourselves on providing a 5-star service, as can be seen from our 2502 and growing independent client reviews rating us at 4.92 / 5.
    • Benefit from the protection of regulated advice
      You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
    • Claims support when you need it the most
      You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.
    • A personalised benefits page for your business
      We want to make it easy for your employees to access and use their benefits. Get a custom landing page containing your policy details, important documents and exclusive discounts 👍 – see example.
    Tom Conner Director at Drewberry

    If you are looking to implement a Group Life Assurance 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 help@drewberry.co.uk.

    Tom Conner
    Director at Drewberry

    Sam was very helpful and kept me informed at all times. Brilliant service.

    Paul Williams
    05/06/2019
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