Group Life Cover
Look after your team's families, not just your team
Group life cover, often called death in service, pays a lump sum for an employee's family if they die while they're a member of your scheme.
It's a benefit employees value, and it can help a growing business attract and keep good people. One policy covers everyone who meets the scheme's rules, subject to the insurer's terms and underwriting.
Free, with no obligation. You deal with Des directly.
At a glance
Who pays
The employer funds the premiums
Who's covered
Employees who meet the scheme's eligibility rules
What it pays
A lump sum, usually a multiple of salary, if a covered employee dies
Who receives
The employee's family or dependants, at the trustees' discretion
Authorised and regulated by the Financial Conduct Authority. FCA No. 1034779
Your employees' families may be less protected than you think
If one of your employees died, would their family be financially secure?
For many people, especially those with children and a mortgage, the honest answer is no. Group life cover lets an employer provide that security for the people in the scheme, under a single policy.
It's a benefit people hope their family never needs, and value knowing it's there.
Relevant life plans
- Individual policies for one or a few people
- Tailored to each person, with individual underwriting
- Often suit directors and a small number of key staff
Group life cover
- One policy for employees who meet the scheme rules
- Benefit usually set as a multiple of salary
- Medical evidence usually needed only above the insurer's free cover limit
What can happen if nothing is in place
Without a scheme, there's very little a business can do for a bereaved family.
- Families left exposedAn employee's family may lose their income with nothing to replace it.
- Harder to recruitCandidates comparing offers may notice when death in service isn't included.
- Harder to keep good peopleBenefits are part of why people stay, not just salary.
- Nothing to offer at the worst timeBeyond goodwill, the business has no practical way to help.
How group life cover works
The employer funds one policy, the scheme rules decide who's covered, and benefits are paid through a trust.
Agree who's eligible
The scheme rules define who's covered, for example all permanent employees or a defined category. Insurers usually require people to be actively at work when cover starts, and set a maximum age and a minimum group size.
Choose the level of benefit
Usually a multiple of each employee's salary, such as two or four times. The scheme rules define what counts as salary.
The employer funds the scheme
The business pays the premiums. They're usually reviewed at renewal, as members and salaries change.
Choose the scheme type and trust
Most schemes are registered group life schemes, set up under a trust. Some businesses use an excepted scheme instead. Each has different tax and trust rules, which I'll explain.
If a member dies
The insurer pays the trustees, who decide who receives the benefit, guided by the employee's expression of wishes. Paying through a trust usually means the money doesn't have to wait for probate.
Who group life cover is suitable for
It suits employers who want a simple, valued benefit for their team.
- Employers who want to offer a valued staff benefit
- Growing businesses competing for skilled people
- Companies replacing several individual policies with one scheme
- Employers reviewing benefits alongside workplace pensions
- Owners who want cover for themselves as part of the team
- Businesses planning to add other group benefits later
When it may not be the right answer
Not every business or employee automatically qualifies: cover depends on the insurer's terms, the scheme rules and, for larger amounts, underwriting. For one or two directors, individual relevant life plans may be more flexible. Group life cover pays the employee's family, not the business; key person protection is the cover that protects the business itself.
Practical examples
These examples are illustrative only. The businesses and people are fictional, not clients, and any outcome would depend on underwriting, the policy terms and a valid claim.
- Illustrative example · Growing firm
A benefit that helps recruitment
A growing firm competes with larger employers for skilled staff.
The plan: group life cover for eligible employees at a multiple of salary.
The result: a clear benefit to include in job offers, subject to the insurer accepting the scheme.
- Illustrative example · Directors and staff
Combining relevant life and group cover
A company wants cover for its two directors and eight employees.
The approach: relevant life plans tailored to each director, and group life cover for the team.
The result: every eligible person can have cover suited to them, subject to the insurers' terms and underwriting.
- Illustrative example · Higher earner
Choosing the right type of scheme
One senior employee earns well above the rest of the team.
The issue: benefits from a registered scheme can count towards the lump sum and death benefit allowance.
The option: an excepted group life scheme, or a relevant life plan for that person.
Common questions
Does every employee qualify?
Not automatically. Eligibility is set by the scheme rules agreed with the insurer. Common conditions include being an employee in the eligible category, being actively at work when cover starts, and being under the scheme's maximum age. Cover is subject to provider confirmation and, for larger amounts, underwriting.
Who pays for it?
The employer pays the premiums. Employees don't normally contribute.
What's the minimum number of employees?
It varies by insurer. Some will cover very small groups, and I'll check what's available for your business.
Do employees need a medical?
Usually not for cover up to the insurer's free cover limit. Above that, an employee may need to give health information, and the insurer may limit cover above that level.
What role do the trustees play?
Benefits are paid to the scheme's trustees, who decide who receives them. Employees can complete an expression of wishes form to guide that decision.
Is it a taxable benefit for employees?
Under current rules, premiums for a registered group life scheme aren't normally a taxable benefit for employees, and are usually an allowable business expense. How the benefit itself is taxed depends on the scheme type, the employee's age and their lump sum and death benefit allowance.
What's the difference between a registered and an excepted scheme?
A registered scheme is registered with HMRC under pension rules, and its benefits can count towards an individual's lump sum and death benefit allowance. An excepted scheme sits outside those rules and is often used for higher earners, but has its own trust and inheritance tax rules. The choice is worth discussing with your accountant.
Can directors be included?
Salaried directors can usually be included as employees, subject to the scheme rules. For a very small business, individual relevant life plans are sometimes a better fit.
Group life cover is subject to provider confirmation, the scheme rules and underwriting. It pays out only on a valid claim and has no cash value. Trusts are not regulated by the Financial Conduct Authority. Tax treatment depends on individual circumstances and may change. Whether premiums qualify as an allowable business expense depends on the circumstances and applicable HMRC rules.
Find out where your business stands
The Business Resilience Health Check takes a few minutes and shows which risks apply to your business. Or book a conversation and talk it through with me.
Or call me on 0121 663 0171