What is Group Life Insurance?
Group life insurance is a type of life insurance cover where a single contract covers an entire group of people. Members of the group usually receive insurance at a reduced cost because the insurer’s risk is spread across a group of policyholders.
Commonly, the policy owner of group life insurance is an employer or an entity such as a labour organisation and the policy provides cover to employees or members of the group.
In most instances, group life insurance is often provided as part of a complete employee benefit package, which significantly reduces the costs for employees and members when its provided as part of a group than in comparison to taking out individual life insurance protection.
If you have no other life insurance in place or if your current personal life insurance cover is inadequate, group life insurance is cover that we highly recommend to businesses owners, as you and your employees can start reaping some significant rewards from it.
Term Insurance – Group Life Insurance Cover
Term insurance is the most common form of group life insurance coverage. It provides coverage for a defined period of time and if the insured expires during the term of the policy, then the death benefit is payable to the nominee. Group life insurance is typically provided in the form of yearly renewable term insurance.
When group term insurance is provided through an employer, the cost of the premiums in some cases (sometimes all) are paid for by the employer and the amount of coverage is typically equal to one or two times an employees annual salary.
Term plans are designed to protect your family and your financial responsibilities in the event of your death or times of uncertainty. With a group life insurance policy in place, employers are able to ensure employees family are looked after and supported financially.
Benefits of Group Life Insurance
Money worries can be a significant distraction and source of stress to employees, which can impact their focus at work. Therefore, benefits that provide financial security and alleviate financial stresses like group life insurance will improve employees focus at work, to keep their attention on the task at hand and will make you look more favourable as an employer, as you will be providing them with this security.
Value for money
Additionally, group life insurance is cost-effective. The per employee cost is typically much lower than employees would pay if they bought it directly, so they value it higher than the actual cost to the employer.
Complements the employee pension
Group life insurance is a natural complement to pension saving and is the ideal starter employee benefit. With all companies now required to set up a workplace pension, life insurance provides financial security pre-retirement when pension savings are small.
It’s Tax Efficient
The premiums paid by the employer are not treated as a P11D benefit for employees, so there is no tax charge. The premium payment is considered a business expense for corporation tax purposes.
Claim payments are paid to a discretionary trust, which includes an inheritance tax charge for employees. However, this is excepted where group life schemes are set up in a flexible and voluntary arrangement and the cover is paid for by the employee. However premiums will be subject to income tax and national insurance contributions.
How Long Does Group Life Insurance Last?
Group term coverage remains in force until an employee’s employment is terminated or until the specific term of coverage ends. With group life insurance, employees have the option of turning coverage into an individual policy if they leave their employer.
However, most people choose not to do this as the conversion premiums tend to be much higher than premiums for comparable policies available to individuals. Usually, only those who are otherwise uninsurable take advantage of this conversion option.
Why Choose Group Life Insurance?
Employee benefits are a great way to attract and retain the best staff. Group life insurance is one of the most popular and valued benefits and we can help provide it. It’s easy to set up and the cover is cheap to buy, so it makes for an ideal starter employee benefit.
To help provide you with group life insurance, give us a call today.