Group risks

Protection against death, a critical illness and loss of income for your employees

Group Life Insurance

 

Group Life Insurance is used as a low cost employee benefit.

It provides an employee’s dependants with a tax-free lump sum benefit and/or taxable pension if he or she dies whilst in service. Obviously, when we say ‘in service’, it just means whilst he or she is employed, they don’t actually have to be at work when they die!  The benefit is usually calculated as a multiple of salary (four times is used commonly).

The scheme is an annually renewed contract which, on the anniversary, takes account of leavers, joiners and changes in members’ salaries.

Scheme members still need to be medically underwritten by the Insurer, but there will usually be a ‘free cover limit’ up to which, members will be automatically covered without any underwriting.

Group Critical Illness Cover

 

Often provided in addition to Group Life Insurance, this scheme provides an employee with a tax-free lump sum benefit if he or she is diagnosed with a critical illness.

The amount of cover can either be a multiple of salary (two, three or four times) or as a flat amount.

The scheme is an annually renewed contract which, on the anniversary, takes account of leavers, joiners and changes in members’ salaries (if relevant).

Scheme members still need to be medically underwritten by the Insurer, but there will usually be a ‘free cover limit’ up to which, members will be automatically covered without any underwriting.

Group Income Protection

 

Group Income Protection is designed to pay a regular monthly benefit to staff if they are unable to work as a result of a long term illness or disability. Most schemes will pay benefit until State Pension Age, however there are several options that may suit your needs better.

It stands to reason that the insurers would rather staff be back at work undertaking their duties rather than simply paying money out, in an effort to assist you most insurers provide rehabilitation services which are aimed at a speedy return to work. A typical rehabilitation package could include counselling or therapy treatment, as well as giving guidance to the employer during that process.

 

TAX IMPLICATIONS

The good news is that if the company provides Group Income Protection to its staff it is not classed as a benefit in kind. It should however be noted that when the company pays the benefit via its payroll system, the income tax and National Insurance are deducted from the payments.

The scheme is an annually renewed contract which, on the anniversary, takes account of leavers, joiners and changes in members’ salaries.

Scheme members still need to be medically underwritten by the Insurer, but there will usually be a ‘free cover limit’ up to which, members will be automatically covered without any underwriting.