What is Group Life Insurance?
It’s the UK’s most popular employee benefit, and it goes by many names: Group Life Insurance, Employee Life Insurance, Business Life Insurance – sometimes even Death in Service Insurance. But what is Group Life Insurance?
Essentially, Group Life Insurance provides a lump sum payment to your employee’s family, should the worst-case scenario become a reality.
In the unlikely but heartbreaking event of an employee’s death, their next of kin will receive the full amount that is chosen at the start of the insurance contract.
This amount will depend on a variety of factors, common ones being length of service and seniority.
Why do I need Group Life Insurance?
Our absolute favourite thing about providing business life insurance is that individuals who would otherwise be denied cover can still access it.
The main reason most employers are interested in Group Life Insurance, however, is that it allows them to give something genuinely useful back to employees.
Here at Hooray, we are strong believers that employees are the most valuable asset to your business.
Being so important, it is crucial that you let everybody know just how much you value them, and it has been proven time and time again that the most appreciated types of rewards are financial.
Whilst it isn’t possible to raise everyone’s salaries, Group Life Insurance instead allows you to offer some level of support to the families of your employees at a time when they are going to need it most.
It doesn’t only help you keep your current employees happy, though. Providing employees with life insurance also shows prospective talent that you are serious about supporting them.
As much as employee benefits tend to be shouted from the rooftops these days, a study we conducted recently found the majority tend to be nice, but relatively unhelpful.
A more useful employee benefits package is one of the fastest steps you can take as an employer to genuinely help your employees, whilst letting the best talent know that you do!
How much does Employee Life Insurance cost?
Employee life insurance is what we do best, so we are dedicated to finding the optimum policy from a cost vs cover perspective.
We also know how different two businesses can be, so in order to give you the exact cover you need, no two policies are the same.
Some of the factors most insurers assess are:
- Average age of employees
- Occupation of employees
- Location of workplace(s)
- Total sum to be insured
- Employees that are off sick
- Any overseas travel
The reality of this is that we often see the cost of insurance for SMEs to be more per head than for larger corporations (who have more staff, meaning a higher headcount to ‘pool’ the risk).
We don’t think that’s right, so our aim is to provide SMEs with the absolute best cover for the absolute best price.
Is Business Life Insurance Available for Small Businesses?
Yes! Business Life Insurance isn’t just available for large corporate clients – it is also fairly priced for small, and even micro businesses.
We review the whole market to establish which product is right for your business, and for small business you have the choice of either:
Group Life Insurance– We work with insurers who can quote for companies with as little as two employees and will still offer very generous levels of cover with no underwriting.
Relevant Life Insurance– Even if you’re a sole trader or a one-man band you can still be covered by Relevant Life Insurance. In this case, you will just require enhanced underwriting (as it’s not on a group basis).
Our team specialise in providing small to medium companies with the best business life insurance, so contact us today for a quote for your business – it’s completely FREE.
Will Group Life Insurance Cover my Existing Medical Conditions?
Group Life Insurance can cover employees for pre-existing medical conditions up to the free cover limit set on the policy. To enable this, we try to always recommend insurers providing a free cover limit that will cover all employees, even if it’s more expensive.
Businesses with a smaller headcount, however, may be asked to disclose if any employees have suffered a serious illness – such as a heart attack, cancer or a stroke – in the last 12 months. That’s why we always advise talking through your options with a broker to get the right advice.
To keep your enquiries free, all our reviews are done over the phone, so even if you just want some advice – feel free to give us a call!
What is a Free Cover Limit on Group Life Insurance Policies?
When we arrange a new Group Life Insurance policy, the insurer applies a ‘free cover limit’ with the quote they provide.
This free cover limit is the maximum cost that each employee on the scheme is covered for without needing to complete any health questionnaires or underwriting processes.
Free cover limits can be extremely useful for employees with pre-existing medical conditions as they do not have to be disclosed for any amount less than the specified limit.
Remember to check your Group Life Insurance Policies limit at each review, as the limit should increase as and when more employees join the scheme.
Is the Group Life Insurance premium taxable?
Employee Life insurance premiums are paid by the employer, so a great benefit for employees is that premiums are not treated as a typical (P11D) expense. That means there is no additional tax charge for employees to pay!
Employers also benefit from the fact that they are able to claim these premium payments as a business expense, so they can access corporation tax relief.
In the event of a claim on the group life insurance policy, the benefit payments can also be paid tax free through the use of either a trust set up by the employer or a master trust provided by the insurer. Both these trusts will prevent any inheritance tax concerns on the payment.
As with all tax-related queries we receive on our insurance policies, we suggest seeking advice from a tax expert or your accountant.
As always, the team at Hooray Health & Protection are happy to talk through the basics and signpost you to the right area of expertise.
Is the Group Life Insurance benefit taxable?
SMEs are our bread and butter here at Hooray (because we love working with you!), so most of our clients are pretty new to their market.
Of those companies, 90% of the cases we work with involve using a master trust.
Any group life insurance policy needs to be arranged using a trust of some sort, to ensure that the compensation is paid out in the most tax efficient way possible.
Employers can arrange a trust themselves, but this can be costly if paying a trust expert to arrange.
It can also be very time consuming and leaves all claims administration down to the employer.
For this reason, we usually advise our clients to set up a master trust, where possible, for ease and simplicity.
What are Master Trusts?
Master trusts are arranged by the insurers and a nominated trustee (usually respected solicitors) to handle all claims for members of the master trust.
Currently, all master trusts are free to use. All you need to do is complete the form and they will set up everything for you.
Once completed, insurers will arrange all claims administration on your behalf.
Currently, certain tax implications mean companies with high earners may not be able to use a master trust if we set up their policy on an Excepted basis (rather than a Registered basis).
Fortunately, however, we have started to see certain insurers operate Excepted Master Trusts to bypass and alleviate this issue.
At Hooray Health & Protection we will always help find the best solution for you. We will always advise on how best to use the various types of Death In Service policies available, taking into consideration differing earnings within the business’ payroll.
Does Employee Life Insurance have added value services?
Death In Service insurance has always been a very price-driven product, with most insurers’ propositions, being virtually the same as each other’s.
If we take a look at the panel of employee life insurance companies we work with, we see that every insurer has a probate and bereavement service, and a master trust.
We have explained master trusts in depth in the above paragraphs, and our protection experts can answer all your other queries on 01273 222805.
Here at Hooray, we really don’t think that money alone is enough to help anyone through heartbreaking events such as a family member’s death.
That’s why probate and bereavement services are included with every insurer we use.
Most insurers will provide employees affected by a bereavement with telephone and face to face counselling sessions.
Some will allow family members access to this service at no extra cost.
If employees covered under the policy are an executor and need assistance with the probate, some death in service insurers will also provide this assistance free of charge.
We are even starting to see new death in service insurers go the extra mile by providing ‘Employee Assistance Programmes‘ that focus on ensuring the employee’s well-being is fully supported.
We are hoping that this will inspire the market to enhance their employee benefit propositions to a combination of financial and emotional aid.
When considering employee life insurance for your company, employee assistance programmes are an added value service that should be considered alongside cost.
How do I arrange a Company Paid Life Insurance Policy?
Arranging your company paid life insurance policy can be a very straight forward process. All you need to do is appoint a broker who knows exactly what they are doing.
Now, we don’t like to brag, but we definitely know what we are doing, and we would love to talk you through everything too!
We first need to review your demands and needs as a business so that we can decide which scheme is best for you.
As every business is so different, a broker or insurer should never tell you what’s the right fit for your company.
Initially, we would assess eligibility using criteria such as length of service, staff members who are currently off sick and what it is that your business does.
Next, we would complete a free market review of our panel of insurers and provide you with a full report comparing their price, service, claims, trusts, terms and conditions (and much more!).
Once you have made your decision, we would request the insurer to proceed with your insurance policy and provide you with an invoice to pay within 30 days.
Can I continue my Death In Service Insurance policy if I leave my job?
If you leave a job where your employer is providing death in service insurance, there is no continuation option as the insurance is agreed on a group basis.
Whilst we cannot guarantee to offer you like for like cover, we can review an individual policy for you which will be subject to medical underwriting, depending on pre-existing conditions.
Why choose Hooray Health and Protection for Employee Life Insurance?
When you speak to our team of experts at Hooray Health and Protection, you know you’re in safe hands.
Our background has provided us with a unique insight into the industry, including how insurers work behind closed doors.
The knowledge gained from this experience allows us to provide our clients with the policies best suited for them, and at the most competitive price available!
It is our aim to ensure that you protect the most valuable assets that your business has – your employees.
So, if you are thinking about group life insurance, already have a policy (but want a better option) or just want to learn more about it, give us a call for a free review today!
Frequently asked Questions about Group Life Insurance
✔ Will my claim be paid?
We are a whole of market insurance broker so will review all insurers but would never recommend placing with an insurance company who has less then a 98% claims satisfaction rating which is 80% of the market.
✔ How much does it cost for a Group Life Comparison?
We do not charge any fees, we are paid commission by the insurance companies for placing the business with them.
✔ Which is the best Group Life Insurance company?
As a whole of market broker we have no preferred provider arrangements and with Group Life Assurance it’s never a one size fits all approach as each business has it’s own unique risks to consider.
✔ Is Employee Life Insurance Employer Paid or Voluntary?
99% of the policies we deal with are employer paid schemes but we can help with voluntary Group Life Insurance
✔ When does Group Life Insurance end?
You will be covered until the termination date chosen on the Group Life policy by your employer. Majority of policies provide cover up until state pension age but some policies will cover staff to 70 or 75.