Group Life Insurance: How much does it cost per employee in the UK? [2026]

Group Life Insurance, also known as Death In Service Insurance, is one of the most cost-effective employee benefits a UK business can offer. Pricing life insurance is a little simpler than most other health and protection policies, but that doesn’t make it completely straightforward.

Ask an insurer for a headline figure and they’ll either refuse to answer or give a quote that doesn’t reflect your actual circumstances.

So, in this guide, we’ve laid out exactly how Group Life Insurance is priced in 2026, with real indicative costs, the key factors that affect the premium, and practical advice on how to make sure you’re getting good value.

If you’d like free one-to-on advice or tailored Group Life quotes to consider for your staff, just give us a ring on 01273 222805 or email hello@hoorayinsurance.co.uk.

How much does Group Life Insurance cost?

The starting point most brokers use is that Group Life Insurance typically costs somewhere between 0.3% and 0.8% of the total sum assured per year. That’s a percentage of the total payout the policy would make, not a percentage of payroll.

Let’s translate that into real numbers. And let’s say that you have 20 employees with an average salary of £35,000 and you’re providing cover of 4x salary per person:

Total sum assured: 20 × £140,000 = £2,800,000:

• Priced at 0.3% of the total sum assured = £8,400 per year (£420 per employee)
• Priced at 0.6% of the total sum assured = £16,800 per year (£840 per employee)
• Priced at 0.8% of the total sum assured = £22,400 per year (£1,120 per employee)

That’s a wide range and the variation is driven by the factors we cover below. But as a rule of thumb, Group Life Insurance is one of the lowest-cost benefits you can provide. For many SMEs, the total annual premium works out cheaper than a single month’s salary for one employee.

“What surprises most business owners is just how affordable group life is compared to other benefits. We regularly arrange policies for small companies where the annual cost per head is less than £300. It’s a small cost when you think about the level of financial protection and reassurance that provides.”

 – Charlie Cousins, Director, Hooray Health & Protection

Illustrative Group Life Insurance costs by company size

The table below shows indicative annual costs for Group Life policies across different business sizes and demographics. These are illustrative ranges based on our experience placing policies (your actual quote will depend on the factors in the next section).

Note: These are indicative ranges only. Contact Hooray for an accurate quote tailored to your business.

What factors affect the cost of Group Life Insurance?

1. The total sum assured

The higher the payout your policy provides (whether that’s 2x, 4x or 8x an employee’s salary) the higher the premium. Most businesses start at 2x or 4x salary, with 4x being the most common choice in our experience. Some businesses opt for a flat lump sum rather than a salary multiple, which can simplify administration.

2. The age profile of your workforce

The older the average age of your team, the higher the premium. This is simply because the probability of a claim increases with age. A young tech start-up with a team in their twenties and early thirties will attract a very different premium to a professional services firm with an average age closer to fifty.

3. The number of employees covered

The more people you cover, the lower the per-head cost tends to be. Insurers can offer better rates when they’re covering larger groups because the risk is spread more widely. A company of fifty people will pay less per employee than a company of five, for equivalent cover.

4. Occupation and industry

Jobs that involve physical risk such as manual trades, construction and roles with significant overseas travel, attract higher premiums than office-based roles. Most standard UK office environments will fall into the lowest risk category.

5. Free cover limit

Group Life policies come with a free cover limit which is the maximum amount per employee that can be insured without individual medical underwriting (AKA medical background checks).

Below this limit, all employees are covered regardless of their health history, which keeps the process simple. Above it, individual underwriting is required, which can increase the cost and add admin.

The free cover limit is usually generous, often covering most employees at standard cover levels. For example, Canada Life’s Group Life offering starts with a free cover limit of £550,000 up to a maximum of £1.25m. (Correct as of July 2026).

6. Whether it’s a registered or excepted scheme

Most Group Life policies are set up as registered schemes. However, high earners might prefer to arrange it as an “excepted” scheme so that it doesn’t affect their pension lifetime allowance  (and potentially attract tax).

The distinction affects tax treatment and trust structure rather than the core premium.

7. Added value services

Many Group Life policies now include additional services including Employee Assistance Programmes, bereavement counselling, probate support at no extra cost. These add real value and shouldn’t be overlooked when comparing policies.

Does Group Life Insurance come with tax benefits?

Yes, and this is one of the most underappreciated aspects of the product.

• The premium is usually an allowable business expense, so your company receives corporation tax relief on the cost.
• Unlike other employee benefits such as private health insurance, group life cover is generally not treated as a Benefit in Kind for employees, so no income tax or National Insurance liability arises for your team.
• The payout on death is made directly to the employee’s beneficiaries through a trust structure, meaning it’s typically paid free of inheritance tax.

“The tax treatment of group life is one of its biggest advantages and it’s something we always make sure clients understand. There’s no P11D, no employee tax liability, and it doesn’t add to their inheritance tax liability.”

 — Charlie Cousins, Director, Hooray Health & Protection

How does the trust structure work – and does it add to the cost?

Group Life Insurance must be written into a trust to ensure the payout is made efficiently, quickly, and tax-effectively to the employee’s chosen beneficiaries. Without a trust, the payment would form part of the deceased’s estate and be subject to probate which can take months or years and may attract inheritance tax.

Most insurers offer a master trust at no additional cost. This is arranged by the insurer and a nominated trustee on your behalf. For most SMEs, this is the recommended route as it’s simpler, costs nothing extra, and removes the administrative burden from you as the employer.

Businesses with high earners or more complex structures may need a bespoke trust arrangement, which can involve some legal costs. Your broker will flag if this applies to your situation.

Can small businesses afford Group Life Insurance?

For the most part, we’d say yes. Group Life is one of the most accessible employee benefits in the market. We’ve been able to arrange cover for companies with as few as two employees, and the cost per head is still very good.

For sole directors who don’t qualify for a group scheme, Relevant Life Insurance achieves a similar outcome covering one person through the business with equivalent tax efficiency.

“I’d encourage any business owner who’s assumed group life is out of their reach to at least get a quote. The number often surprises people. We’ve arranged policies for five-person companies where the total annual premium is less than the cost of one team lunch.”

 — Charlie Cousins, Director, Hooray Health & Protection

How do you get the most competitive Group Life Insurance quote?

The key is working across the whole market rather than going direct to a single insurer. Each insurer prices risk slightly differently – the same group of employees might attract rather different premiums from different providers. Making use of a broker who compares across all of them will almost always find a better price than going direct.

Beyond shopping the market, there are a few practical things you can do:

• Review at renewal as premiums tend to creep upward, and a broker-led review at renewal will identify whether a switch makes sense
• Bundle with other policies, if you already have Group Income Protection or Business Health Insurance with an insurer, there may be a multi-policy discount available
• Consider your cover multiple if 2x salary achieves what you need, there’s no benefit to paying for 4x
• Keep your employee data accurate. Insurers price based on the information you provide; outdated age data or inflated salary figures will affect your premium.

How can Hooray Health & Protection help?

We arrange Group Life Insurance for UK businesses of all sizes, from early-stage start-ups to established SMEs. As an independent broker, we compare policies from across the market, including: Aviva, Canada Life, Legal & General, MetLife, Unum, YuLife and more.

We’ll only recommend a policy that fits your business, rather than one that’s easiest to place.

There’s no fee for our service. We’re paid by the insurer, which means the premium you pay is exactly the same as if you went direct but you get expert guidance, market comparison, and ongoing support included.

To get a no-obligation quote or to talk through your options, call us on 01273 222805 or email hello@hoorayinsurance.co.uk.

Frequently asked questions

How much does Group Life Insurance cost for 5 employees?

For a small team of 5, costs vary widely based on age and cover level, but you might typically expect to pay between £400 and £1,000 per year in total for a standard policy offering 4x salary cover. This works out to roughly £80–£200 per person per year and often less than people expect.

Is Group Life Insurance the same as Death In Service?

Yes. Death In Service, Employee Life Insurance, Group Life Cover and Business Life Assurance are all terms that describe the same product. The policy pays a lump sum to an employee’s chosen beneficiaries if they die while employed by the company.

Does Group Life Insurance cover pre-existing medical conditions?

Up to the free cover limit, yes, employees don’t need to disclose their medical history, and pre-existing conditions don’t affect their eligibility. Above the free cover limit, individual underwriting applies, which means the insurer will assess each person’s health individually.

What happens to Group Life Insurance if an employee leaves?

Cover ends when employment ends. The policy is employer-sponsored, so it only applies while the person is an active employee of the company.

Can we offer different levels of cover to different employees?

Yes. Many businesses operate a tiered scheme for example, covering senior employees at 4x salary and all other staff at 2x. Your broker can help you design an eligibility structure and cover levels that work for your business.

Related reading on Hooray Health & Protection:

• Compare Group Life Insurance — free quotes
• What is a Group Life Trust and why does it matter?
• 11 leading Group Life insurers in the UK
• Case study: Journeys by Design discover the right life insurance policy