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 an Employee Life Insurance 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:
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.
To add employees to a Group Life Insurance scheme, 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 also known as Contractor Life Insurance, 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 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:
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.
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 group life assurance 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.
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.
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.
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.
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 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 email@example.com.
Director at Drewberry
I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.