Group Life Assurance (Death in Service) Explained
Provision of a Group Life Assurance scheme goes a long way towards demonstrating an employer’s genuine care for staff welfare as well as encouraging loyalty and reassuring staff that they are valued.
What is a Group Life Assurance
Group Life Assurance enables you as an employer to provide a lump sum benefit in the event of an employee’s death. Cover can be provided for your entire workforce or a defined category of employees. It is considered an essential employee benefit, provides valuable financial peace of mind in the event of an employee death, and demonstrates that you care for the welfare of your workforce.
A group life assurance scheme can offer, in the event of an employee’s death whilst they are on your payroll, a multiple of salary (i.e. 2 or 4 x salary) and/or a fixed amount as a lump sum benefit to the employee’s family and dependents.
The scheme can be tailored to meet your specific needs, which could include flexible benefit arrangements and cover for an employee’s spouse or partner. Schemes can be established on a ‘registered’ or ‘excepted’ scheme basis whereby registered schemes are written under a trust registered with HMRC and excepted schemes are written under a discretionary trust. The different trust structures are subject to different taxation rules.
Benefits for employers
- Can usually be structured with premium rates that represent a very low percentage of the employer’s payroll.
- Registered scheme premiums are usually allowable as a business expense thereby reducing the net cost to the employer through corporation tax relief.
- A wide variety of features can be incorporated into any scheme therefore meaning that it can easily reflect your requirements.
- A group life assurance scheme can offer a Free Cover Limit which can often result in medical evidence not being required.
- Having Group Life cover in place enables you to contribute invaluable financial support to your employee’s beneficiaries.
- Group Life cover also plays a role in attracting and retaining staff, as it clearly demonstrates a business’s commitment and care to employees.
Benefits for employees
- Any premiums paid on an employee’s behalf are not treated as a benefit in kind.
- Any lump sum benefit is normally payable outside an employee’s estate and free from Inheritance Tax.
- A Group Life scheme can provide peace of mind and reassurance for your staff.
- Cover can be continued, up to a certain period, when an employee is absent from work due to sickness or taking, with an employer’s consent, a sabbatical.
- Employees who have had protection polices rated, with exclusions or cover not offered can receive up to the free cover limit without medical underwriting.
- The above information regarding taxation is based upon our understanding of current legislation which, of course, is liable to change in the future and would depend upon an individual’s financial circumstances.
How can we help
We can help you understand how Group Life scheme can benefit your business, your employees and their families. We can guide you through the different cover options available and help you decide the right features and benefits for your scheme.
We will work with you to put in place cover that meets your specific business needs and can provide ongoing support to ensure your scheme remains fit for purpose as your business grows.
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MWM Employee Benefits Ltd is an authorised representative of Menzies Wealth Management who is authorised and regulated by the Financial Conduct Authority (486548). Registered address: 1st Floor, Midas House, 62 Goldsworth Road, Woking, GU21 6LQ Registered in England and Wales 06597008.