What is Group Life Insurance?
Group Life Insurance/Employee Life Insurance/Business Life Insurance, or as it’s historically known as ‘Death in Service Insurance’, is arguably the UK’s most popular employee benefit.
Group Life Insurance provides a lump sum payment to your employees family or next of kin, should anything happen to them.
The amount the employee’s beneficiary will receive will be chosen at the start of the insurance contract.
Amounts can vary depending on scheme set up; e.g. length of service or seniority etc.
Why do I need Group Life Insurance?
One of the main reasons employers should consider providing Group Life Insurance is that it will allow them to offer some financial support to the families of their employees at a time when they are going to need it most.
At Hooray, we are strong believers that employees are the most valuable asset to your business.
Anyone has the potential to be a brilliant employee, a sprinkling of good faith from their employer goes a long way.
Recent studies show the average cost of business life insurance to be £115 per person and we believe that the value added to your business, always outweighs the cost per employee per year.
Protecting your employees with life insurance has many benefits that apply directly to your business.
We have countless feedback from employees that this benefit is well received at the company.
It makes employees feel valued and aren’t just another number in the corporate machine, as well looking after their family’s welfare.
When considering employee benefits, we also have to keep an eye on the competitiveness of the UK job market.
Companies should do everything they can to attract and retain the best talent; a strong employee benefits package is one of the easiest steps you can take as an employer to meet those needs.
How much does Employee Life Insurance cost?
Due to our wealth of experience dealing with employee life insurance schemes, we understand the best way to navigate the market from a cost vs cover perspective.
We don’t usually like to provide prices upfront as we no two clients are the same in their requirements.
In 2017 Swiss Re (a benchmark as one of the World’s largest reinsurance and insurance companies) launched the Group Watch report where they reviewed all death in service insurers business to asses the group life market.
One of the main findings from their report was the average cost for employee life insurance being £115 per employee per year.
The calculated average cost per policy is based on all of the schemes in-force that the industry has, so naturally, the larger the workforce, the lower the cost per employee.
Insurers will usually consider the following when pricing a scheme:
- Average age of employees
- Occupation of employees
- Location of workplace(s)
- Total sum to be insured
- Employees that are off sick
- If there is any overseas travel
If we take the above into account, we will often see the cost of insurance for SMEs to be more per head than for medium to large corporations as larger clients have more staff, hence a higher headcount to ‘pool’ the risk.
We have covered more on group life pricing in our post on the Hooray Knowledge Hub ‘Group Life Insurance: The Good, The Bad and The Pricing‘.
Is Business Life Insurance Available for Small Businesses?
Business Life Insurance isn’t just available for large corporate clients as it is also available for small and micro businesses.
We review the whole market to establish which product is right for your business but 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– If you’re a sole trader or one-man band you can still be covered by Relevant Life Insurance, but this will require enhanced underwriting as not on a group basis.
Our team specialise in the SME market so contact us today for a free quote for your business.
Will Group Life Insurance Cover my Existing Medical Conditions?
Group Life Insurance can provide cover employees for pre-existing medical conditions up to the free cover limit set on the policy, hence why we usually always recommend insurers providing a free cover limit to cover all employees even if it’s more expensive.
Businesses with a smaller number of employees however may be asked to disclose if any employees have suffered a serious illness in the last 12 months such as heart attack, cancer, stroke etc. which is why we always advise talking through your options with a broker to get the right advice.
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 amount of cover every employee on the scheme can be insured up to without completing 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 anything under the free cover limit.
It is important to ensure you review 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 assurance premiums are paid for by the employer so a great benefit for employees is that premiums are not usually treated as a P11D benefit, so there is no additional tax charge for employees to pay.
Employers can usually also benefit from the fact they are able to claim these premium payments as a business expense for corporation tax relief.
In the event of a claim on the death in service policy, the benefit payments can also be paid tax free through the use of a trust the employer has set up or a master trust that has been provided by the insurer, which will prevent any inheritance tax concerns on the payment.
As with all taxation queries, we receive on our death in service insurance policies we suggest seeking advice from a tax expert or your accountant.
Our team at Hooray Health & Protection however 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 (we love working with you!) so most of the Clients that we deal with are new to the market.
Of those clients, 90% of the cases we work with involve using what is called a Master Trust.
Any group life insurance policy needs to be arranged using a trust to ensure the nominated beneficiary receives the lump-sum benefit in the most tax efficient manner.
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.
In every case possible we will advise clients to set up a master trust if 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 insurers master trusts are free to use for their clients, all clients need to do is complete the form and they will set up everything for you.
Insures will then arrange all claims administration on your behalf.
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).
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.
Fortunately, we have started to see certain insurers operate Excepted master trusts to bypass and alleviate this issue.
At Hooray Health & Protection however we will always help find the best solution for you.
Does Employee Life Insurance have added value services?
Death In Service insurance has always been a very price driven product as most insurers’ propositions, are 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 but our protection experts can answer any other queries on 01273 222805
Probate and Bereavement services though are included with every insurer we use at Hooray Health & Protection.
Most insurers will provide employees affected by a bereavement with telephone counselling and up to five face to face counselling sessions.
Some insurers will allow family members of the employees with access to this service also, for no extra cost.
If employees covered under the policy are an executor and need assistance with the probate, some death in service insurers provide assistance free of charge.
We are also starting to see new death in service insurers leading the way by providing ‘Employee Assistance Programmes‘ or well-being applications using technology and innovation, we are hoping will inspire the market to enhance their employee benefit propositions within this particular arena.
When considering employee life insurance for your company it is the added value services 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 if you appoint a broker who knows what they are doing…like Hooray Health & Protection for example 😊.
We firstly need to discuss the scheme set up and review your demands and needs as a business, as every business is different a broker or insurer should never tell you what’s the right fit for your company.
Initially we would discuss eligibility such as criteria based around length of service, any staff members who are currently off sick and establish exactly what your business does etc.
Next, we complete a free market review of our panel of insurers and provide you a full report comparing price, service, claims, trusts, terms and conditions plus much more.
Once you have made your decision, we would request the insurers proceeds on risk 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 your job where your employer is providing death in service insurance there is no continuation option as the insurance are agreed on a group basis.
We can review an individual policy for you but this will be subject to medical underwriting so we cannot guarantee to offer you like for like cover 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 and how insurers work behind closed doors.
We have the relevant experience and knowledge to allow us to provide our clients with the policies best suited for them at the most competitive price available.
It is our aim to ensure that you protect one the most valuable assets that your business has- your employees.
If you are considering taking out group life insurance or you have a policy already but your broker isn’t pulling their weight (or charging you too much!) then 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.