Group Life Assurance

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 Employee Life Insurance?

The Benefits for Employers

According to Investors in People…

• Almost 1 in 5 UK employees are unhappy in their job due to a lack of benefits
• 44% of UK employees considered company benefits to be one of the most important qualities that attract them to a new company
• Meanwhile, according to the Chartered Institute of Professional Development, 54% of people currently looking for a new job are looking for better pay or benefits, citing this as the main reason for their move.

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…

“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.”
Michelle Donlin
HR and Office Manager at Profile Pensions

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 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.

📥   Guide to Group Life Insurance

Can We Get Group Life Assurance?

To add employees to a group policy, 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 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.

How Much Does Group Life Assurance Cost?

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:

• 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.

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.

Joe Toft
Employee Benefits Consultant at Drewberry

Example : 10 Employee Software Development Company in London

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:

• 4 x Annual Salary
• Covered to State Retirement Age

Example : 200 Employee Hospital Service Company in Barnsley

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:

• 1 x Annual Salary
• Covered to State Retirement Age

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.

Setting Up A Company Life Insurance Policy

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:

• Number of employees covered
• How long the employee has to work for you before their Life Insurance coverage kicks in
• The multiple of salary they’ll be covered for
• Whether you want to cover more senior people in the business for a higher multiple of salary
• Whether high earners / those with larger pensions will be better served by an excepted Group Life scheme rather than a registered one
• Whether to use a bespoke trust or the insurer’s master trust option.

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.

Nadeem Farid
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.

How is Group Life Cover Taxed?

Compare Top UK Group Life Insurance Providers

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

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 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

AIG

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.

• Free cover level: £1.25 million
• Minimum lives: 3
• Max. policy cease age: 75
• Master trust: Available

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 includes an extensive Employee Assistance Program.

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

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’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.

• 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 2643 and growing independent client reviews rating us at 4.91 / 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.

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 help@drewberry.co.uk.

Tom Conner
Director at Drewberry