Chartered Financial Planner logo

Norwich: 01603 760866

Ipswich: 01473 255948

Impartial  

Accountable  

Trusted  

What is Group Life Cover (Death in Service)?

Examining the benefits.

Group Life insurance is a type of life protection in which a single contract covers an entire group of people.

Often referred to as ‘Death in Service’, it covers staff if they were to die, anytime, whilst employed by your business – not just when they are at work.

Life insurance is one of the simplest but most highly valued employee benefits that a company can offer to its staff because, quite often, no medical underwriting is required.

If an employee were to die, the life cover you put in place for them would help ensure their family could cope financially – relieving money worries at a very difficult time by providing a tax-free lump sum. Under certain circumstances, an insurer may also consider paying out the benefit while the employee is still alive.

Life cover has always been an expected and valued employee benefit, as well as inexpensive to provide. It can assist in attracting and retaining talent within your business, while at the same time demonstrating that you are a responsible and considerate employer.

Benefits are normally based on the employee’s earnings (up to 12 x annual salary but typically around 4x) or can provide a fixed amount for everyone i.e. £100,000.

The Insurer will often provide a ‘Free Cover Limit’, and providing the sum assured for the individuals is under this limit, there will be no medical underwriting for your employees.

You will need to declare information about any employees who, to the best of your knowledge, have any life threatening conditions though. The employer will pay the cost of the premiums and the policy renews on an annual basis.

The cost of providing £50,000 worth of life cover for six employees, with no medical underwriting and aged between 16-64 would be £75 per month*.

*Eligibility Conditions Apply

BENEFITS FOR EMPLOYERS

A more competitive and attractive benefits package helps recruit and keep the right staff

Premiums will normally qualify for tax relief depending on scheme choices

Usually costs less than 1% of payroll depending on the level of cover

BENEFITS FOR EMPLOYEES

  • Peace of mind for them and their loved ones
  • Lump sum benefits can be paid without waiting for probate and free of Inheritance Tax
  • This valuable cover is not classed as a benefit in
  • kind, meaning no Income Tax is payable by the employee
  • Employees are able to nominate their preferred beneficiary
  • Quite often, no medical underwriting is required

Ryan Oates APFS BSc
Corporate Services Manager
Chartered Financial Planner
e: ryan@sgcorporateservices.co.uk
t: 01603 760866

Share this post

Share on linkedin
Share on facebook
Share on twitter