Provide financial security to your employees with group life insurance.
Group life insurance is a type of death-in-service benefit provided to employees. The company pays for the policy, however, if the employee dies or is diagnosed with a terminal illness, the benefit (lump sum payment) goes to the deceased's loved ones.
Group life insurance - sometimes called business life insurance, is typically part of a broader employee benefits package.
Life insurance reassures employees who worry about how their family members would cope should the worst happen.
Providing group life insurance is a great way to show your employees how much you value them, which helps retain the best talent and fosters a positive working culture.
Unlike relevant life insurance, which is better for company directors and small businesses, group policies are specifically for companies with a minimum of 5 people.
Here's how you would typically buy and use a group life insurance policy:
There are many considerations and terms to think of when setting up a group life policy, but two, in particular, are good to point out.
When companies provide group life insurance, it benefits the employee, their loved ones, and the company.
Group life insurance policies are typically set up to offer cover to a multiple of an employee's annual salary. If the employee becomes terminally unwell or they pass away, the benefit will be paid to their nominated beneficiary.
Some employers elect to extend their group schemes to employees' families to provide more protection to them.
Group life insurers offer a range of additional options that can be added to your company's policy:
Most of the time, your group life insurance policy will pay out promptly with minimal stress. However, not all causes of death will be covered by the policy, and some other exclusions may apply.
Exclusions may include:
In all cases, check the terms and conditions of your policy or speak with us.
Your level of cover depends entirely on you and the needs of your business.
Typically businesses will provide cover for a multiple of their employee's annual salary, between two and eight being the most common. However, it's also possible to specify a flat amount.
Group life insurance is purchased via the business and is usually an allowable business expense, meaning it's tax deductible. In addition, group life insurance schemes aren't traditionally seen as a P11D Benefit in Kind by HMRC, so your employees won't need to pay any additional National Insurance or tax on their income.
Finally, as long as a trust is set up at the same time as the plan's inception, the benefit relatives receive won't usually be subject to inheritance tax.
Four of the UK's major insurance companies offer group life cover so you can deliver more benefits for your employees. Let's look at each of them in turn:
Aviva provides valuable financial support to loved ones left behind when an employee dies while working at your company. It prides itself in prompt payment, paying 100% of group life claims within a week or less, so it's one less thing to worry about at an already stressful time.
It also offers a great range of add-ons, including:
Legal & General provides simple policies designed to provide vital financial help for your employees' loved ones if your employee dies while covered by the policy. It will pay out a tax-free lump sum or taxable dependent's pension. Depending on your policy type, you could qualify for tax relief on premiums.
Extras include:
Vitality offers award-winning business life insurance rated 5-star by Defaqto. Being Vitality, there are all kinds of rewards for making healthy lifestyle choices, so your employees can enjoy a healthy life with peace of mind knowing they're covered should the worst happen.
Features include:
Insurance can be complicated at times, so our priority is to keep things simple and give you the facts you need to make a decision. We don’t rush or push clients in a given direction - it’s vital you come away feeling confident in your choice.
