Group life insurance was the second most popular employee benefit in our survey of startup employees last year. this is no doubt due to the financial security and peace of mind it offers. however, for employers, it is also one of the most affordable due to its relatively low cost and the fact that you only need two employees to qualify.
While it’s generally easy to set up, there are still a few things worth knowing before you take action and invest in an employee group life insurance policy.
Reading: What is employee life insurance
We’ve listed the top five things you need to know when buying group life insurance in the UK, boiling it down to the basics.
Looking for the right employee benefits for your staff? contact our friendly team at [email protected] or use the chat box on the bottom right. without charge or obligation.
how group life insurance works
Group life insurance, also known as employee life insurance or death-in-service insurance, is a policy purchased by companies to provide a one-time, tax-free payment to an employee’s selected dependents (usually partners or relatives) in the sad event of the death of that employee.
The amount paid will be selected by the employer before coverage begins, deciding whether to include all employees or a select group of key workers under a plan. you can calculate the payment as a multiple of the employee’s salary or provide it as a fixed amount (see the next section).
Companies have complete flexibility in how they provide coverage. One popular method is to establish a tier system where staff receive different levels of coverage based on their position within the company.
Providing a group life insurance policy for employees is incredibly reassuring, not only for team members, but also for their families.
how much does group life coverage cost
according to data from canada life, the average premium for group life cover was £1,316 for first-time buyers. however, the amount ultimately depends on how much coverage you choose to offer and the profile of your workforce.
Most employers provide coverage for double or quadruple an employee’s salary, although it can go even higher. here is an example of how it works:
employee a earns £40,000 a year. You decide, as a generous employer, to offer life insurance that pays 3 times your salary in the event of your death. In the event of a successful claim, your dependents would receive a lump sum payment of £120,000.
Alternatively, you can offer a fixed payment amount, setting a specific figure instead of a multiple of a salary.
The profile of your workforce is the other key element that affects cost. The insurer will set the premium based on the following data:
- place of work
- any employee on sick leave
- any previous/long-term absence
- any employee who has suffered serious medical conditions (last 12 months)
- provides staff with a consistent level of protection: does not discriminate based on health history
- Cost-effective (less expensive than buying individual insurance plans) – can cost less than 1% of annual payroll!
- increases retention and attracts high levels of staff
- may cover pre-existing conditions
- can be classified as a business expense, therefore tax-free
- extremely helpful for covering funeral costs and other death-related expenses
- simple and easy to administer compared to individual policies – multiple staff members covered under one plan
The important thing to note here is that they don’t take an in-depth look at any person’s health profile. that is, they do not request the medical history of their employees, only the basic information described above.
Looking for group life insurance quotes? our friendly team of experts will be happy to provide them free of charge. Plus, we’ll answer any other questions you may have about other insurance products and employee benefits. just call 01273 222805 or use the chatbox to the right.
Benefits of providing a group life policy for employees
Group living is one of those employee benefits that just keeps on coming. Here are some additional ways you empower your teams, as well as your business as a whole:
Offering clear financial protection to your staff will instantly make you a popular employer, boosting the overall business environment and making your teams feel cared for.
The value of financial security today
providing a group life insurance policy for employees helps alleviate some of the stress and worry people may have about their health and well-being, and the aftermath of a tragic turn of events.
The current climate has arguably brought these concerns to the forefront like never before. from the financial uncertainty of rising cost of living, to the continued presence and impact of covid-19, to wars in other parts of the world; It really is a time of uncertainty. While employers can’t solve all the world’s ills, or guarantee 100% the health and well-being of those who work for them, they can at least provide financial security and make the workplace supportive and rewarding.
An employee group life insurance policy is just one part of the mix of employee benefits that can help make a significant difference, and as one retailer is always keen to point out: every little bit helps.
If you’d like some free advice on how best to support your teams, simply use the chat box to the right to start the conversation.
free coverage limits and master trusts
When planning an employee group life policy, it pays to know free coverage limits and master trusts.
free coverage limit
When setting up a new policy, a limit is applied to the amount an employee can be automatically insured for. If you are providing coverage above this amount, the insurer will require a medical background check. fortunately, the limit is quite generous. for example, for a company that offers a group life insurance policy for 20 employees, there may be a limit of cover of £500,000 for each person. each insurer will provide a different limit, and it will go up or down depending on how many people are included in the plan.
The free coverage limit is established as the maximum cost covered by each member of the policy staff, without the need to fill out health questionnaires or subscribe. It’s the best way for insurance companies to protect themselves against a massive payout!
Master trusts are organized by the insurer and the designated trustee, and handle all claims on behalf of the employer. Although it is normally operated by a legal firm (appointed by the insurer), it is possible for you to set up your own trust. however, this can be time consuming and expensive. that’s why most just opt for the insurer’s own master trust, which is provided free of charge and requires very little work to set up.
hurrah cheers & protection, we recognize the importance of providing the right mix of benefits to staff, whether it’s creating a group life insurance policy for employees, selecting health insurance schemes, or implementing an employee assistance program. Give us a call on 01273 222805 or click on the lower right chat box and we’ll give you direct advice and the most competitive quotes.