Group Life Insurance is one of the most cost-effective employee benefits available. But its value derives from more than just its comparatively low cost. Taking out a Group Life plan demonstrates you care about your employees and their loved ones, which helps foster a greater sense of goodwill from your team.
So, what is Group Life Insurance? And how much does Group Life Insurance cost?
To help answer these questions, this article features real-life examples courtesy of some of the insurance companies we work with, including:
If you’d like professional assistance in getting the best deals on Group Life, contact the experts at Engage Health Group on +44 (0)1273 974419. We specialise in providing clarity in an otherwise confusing marketplace. Alternatively, send us a query using the chat function in the bottom right corner.
What is Group Life Insurance?
Group Life Insurance is a policy that provides a tax-free lump sum to an employee’s dependants (usually family members) if that employee passes away while covered by the policy. Group Life provides financial security to an employee’s family, ensuring peace of mind and financial wellbeing.
Employers have flexibility on how to structure their cover – either providing for every employee or for defined categories of the workforce. It is often common for businesses to tier Group Life to different levels of staff, establishing different benefit levels.
Note: Group Life Insurance covers pre-existing conditions with no medical underwriting (health/lifestyle assessment) needed in most cases.
How much does Group Life Insurance cost?
Most employers will provide coverage for either 2x or 4x an employee’s salary, although some do go higher. For instance, if an employee was earning £20,000 and you provided cover for 2x the salary, the insurance pay out would be £40,000 (should the worst occur). Once a claim is made, this is then paid out as a tax-free lump-sum to that employee’s dependants.
Another way to provide coverage is by offering a flat pay-out amount, rather than a multiple of the salary.
To help calculate these costs, the following information is usually required by the insurance provider for each team member:
- Work Location
- Occupation (dangerous jobs)
- Any employees absent from work due to sickness
- Any previous or current long-term absentees
- Any employees who have suffered serious medical conditions (past 12 months)
To manage any claims and payments, a Master Trust needs to be appointed to a legal firm. This can be set up by your insurer free of charge, ensuring ease with payments to dependants and to negate inheritance tax.
Are you looking for bespoke deals on Group Life and other employee benefits? Get expert advice from the specialists at Engage. We help businesses understand the health insurance and employee benefits market by using clear and concise language. Simply put your questions to us using the chat feature in the bottom right or call +44 (0)1273 974419.
Examples from Engage Life Insurance providers
Trying to pinpoint the best deal can be difficult. Every provider offers different terms and conditions which muddy the waters when it comes to trying to make a direct price comparison. Nonetheless, it’s useful to see some real-life examples.
Below are a few examples from providers that we work with, and how they have set up their Group Life Insurance offers.
“Protect your employees today and in the future with Group Life Insurance that inspires your people to live well – and rewards them for it.”
- Choose a tax-free lump-sum based on multiple of an employees’ salary e.g., 4x salary
- Choose a fixed lump-sum e.g., £50,000
- Get the YuLife app which rewards employees for healthy behaviour
- Earn YuCoin by completing wellness challenges e.g., 10-minute walks/5-minute meditation
- Convert YuCoin through partners such as Amazon, ASOS, Avios, M&S
- 24/7 EAP – life coaching, help with bereavement, mental health support with work, relationships, finance
Canada Life –
“Group Life Insurance can cost as little as 1% of your company’s salary costs. It’s an affordable employee benefit and is deductible as a business expense.”
- Any organisation/employee can be insured if legally with a discretionary trust – registered in the UK, Channel Islands or Isle of Man
- Available for most employees – permanent, part-time, directors, zero-hour contracts, fixed-term contract, temporary
- Option to choose who you want to cover in your policy e.g., might choose to include all permanent employees ages 16-75
- Option to select the level of cover available e.g.:
- Multiple of Salary: up to 10-x salary e.g., an employee earning £25,000 is covered by a multiple of 4 will receive £100,000
- Fixed Benefits: fixed amount regardless of salary e.g., all employees receive £100,000
- Free bereavement counselling for employees/immediate family
- Free Probate helpline – expert advice on estate handling (property, money, possessions)
“helps show you care and often forms a core element of a modern benefits salary”
- Benefit paid is based on multiples of salary
- Free bereavement and probate support
- Six face-to-face bereavement sessions
- 24-hour helpline – practical guidance and emotional support e.g., how to register a death
Legal & General –
“providing personalised support around the clock for all your employees”
- Available to employers wanting to cover 10 or more employees
- Support from an expert team making administration and set up straightforward
- Simple claim payments to scheme trustees – within 5 working days of a claim
- Master trust: lump-sum benefits, no extra cost – offered instead of having to set up your own scheme
- Specialist cover for equity partners/limited liability partnerships
- Health and wellbeing app ‘My Healthy Advantage’ to help employees manage overall health 24/7
The impact of covid on Group Life Insurance
Group Life Insurance has always been a highly regarded benefit for employees but, since the beginning of the pandemic, it has become even more sought after. Group Risk Development revealed for 2020 the total cost of payments for Covid-registered deaths came to £93 million, representing an average lump-sum payment of £100,320.
These figures show just how important Group Life Insurance and why it should be an important consideration within any employee benefits strategy.
Contact us through Engage Health Group for our free no-obligation advice & support to learn more about how Group Life Insurance can benefit your business.