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Group Life Insurance

This type of policy (also known as Death-in-Service Insurance) provides cover for all employees across a business in the event of the death of one or more employees, whether working in the business or at any other time. It is particularly advantageous to employees who might struggle to gain life insurance on a personal basis as the underwriting is based on the number and age profile of the employees, not their lifestyle or medical history.
Read more

Features:

  • Coverage for Employees: Group life insurance provides a lump sum payment to the designated beneficiaries of an employee in the event of their death during the coverage period. The coverage amount is typically based on a multiple of the employee's salary or a fixed amount chosen by the employer.
  • Group Coverage: Group life insurance covers a group of employees under a single policy, making it a cost-effective option for businesses. It simplifies the administration process as employees are enrolled automatically without the need for individual underwriting.
  • Flexible Coverage Options: Employers can choose different coverage levels based on their budget and the needs of their workforce. They can select a flat benefit amount or a multiple of the employee's salary.
  • Optional Add-ons: Some group life insurance policies offer additional options, such as spouse or partner coverage, which provides a benefit to the employee's significant other in the event of their death.

Benefits:

  • Financial Protection for Employees' Families: Group life insurance ensures that employees' families receive a financial safety net in the event of the employee's death. The lump sum payment can help cover funeral expenses, mortgage or rent payments, outstanding debts, and ongoing living expenses.
  • Employee Retention and Recruitment: Offering group life insurance as an employee benefit can enhance the overall benefits package, making the company more attractive to current and potential employees. It demonstrates the employer's commitment to the well-being of their workforce.
  • Peace of Mind: Group life insurance provides peace of mind to employees, knowing that their loved ones will be financially protected if they pass away. This can contribute to a positive work environment and employee satisfaction.
  • Tax Efficiency: In the UK, group life insurance policies are usually tax-efficient. The premiums paid by the employer are generally tax-deductible as a business expense, and the benefits received by employees' beneficiaries are usually tax-free, subject to certain conditions.
  • Supportive Bereavement Services: Some group life insurance policies provide additional support services for employees and their families, such as bereavement counseling or access to helplines for emotional support during difficult times.

It's important for businesses to carefully consider their specific needs, consult with insurance providers, and review policy terms and conditions to select the most suitable group life insurance coverage for their employees.

Free Quote

Key Person Insurance

This type of policy protects businesses financially if a key individual within the business (typically a company director) dies or can no longer act in any capacity with immediate effect in the event of serious illness. It is often required by lenders to cover the full repayment of a loan. It is an important consideration for many small and medium-sized businesses.
Read more

Key Man Insurance or Key Person Insurance is essentially a form of life insurance for businesses. It is generally taken out by a business to compensate for financial losses that would arise from the death or extended incapacity of the key individual(s) of the business specified in the policy, and in turn ensure the continuity of the business.

There are generally three categories of loss for which Key Man Insurance can provide compensation:

  • Protect losses related to the extended period when a key person is unable to work by providing temporary personnel and, if necessary, financing the recruitment and training of a replacement.
  • Protect profits such as offsetting lost income from lost sales or contracts; or losses resulting from the delay or cancellation of any business project that the key person was involved in; or loss of opportunity to expand, loss of specialised skills or knowledge.
  • Protect business & director loans, overdrafts or investments. The value of insurance arranged can be used cover their repayment in full, or to assist in generating continued profit (as above) to help make any monthly payments.

As a result, a Key Man or Key Person can be anyone directly associated with the business whose loss can cause financial strain to the business. For instance, they could be a Director of a company, a Partner, key sales people, key project managers and people with specific skills or knowledge which is especially valuable to the company.

Free Quote

Directors Life Insurance

This type of policy (also known as Relevant Life Insurance) can provide a complete tax-free solution to life insurance for company directors where both the premiums and the lump-sum payment in the event of a claim are tax-free. The premiums are not classed as a benefit-in-kind and, if the policy is written into a discretionary trust, then any payout is not subject to inheritance tax.
Read more

Life Cover for Company Directors (known as a Relevant Life Policy) is a way of providing death-in-service benefits on an individual basis no matter how small your business is. They are not classed as a ‘benefit in kind’ so no tax is payable on the premiums. In most cases the benefits can be paid free of inheritance tax provided the benefits are payable through a discretionary trust.

If you’re a company director and you already have life insurance in place to protect your family, you could be paying more tax than you need to.

What are the benefits?

  • Although the company pays the premiums, they are not normally assessable to income tax on the employee as a benefit-in-kind. This can be a significant saving, particularly for a higher-rate taxpayer
  • Unlike a registered group scheme, the benefit will not form part of the employee’s annual or lifetime pension allowance

What are the advantages of using a discretionary trust?

  • There are restrictions as to whom the benefits of a Relevant Life Policy can be paid, but the use of the trust is the most practical way of ensuring these restrictions are met. The beneficiaries who could be included are usually family members and dependents
  • Having benefits paid through a trust ensures they cannot be taxed as part of the company’s trading income, nor do they form part of the company’s assets
  • The trust is discretionary, allowing trustees to be flexible as to whom they pay benefits. However the employee can advise the trustees of his or her intentions by completing a nomination form. Although this is not legally binding on the trustees, it helps to guide them. The trustees will normally be the directors of the company
  • Using a trust also ensures that in most circumstances benefits are paid free of both income tax and inheritance tax
  • The maximum cover differs across insurers: for example, Bright Grey offer a figure up to 15 times the employee / director’s remuneration. This can include salary, regular dividends paid in lieu of salary and any benefits in kind

Are there any limits to the cover I have?

  • The legislation does have some limits to qualify for the tax concessions, and to ensure these are met, it requires that:
  • The cover must be paid in a single lump sum before the age of 75
  • Only Death & Terminal Illness benefits can be provided
  • Benefits must be paid through a discretionary trust
  • Beneficiaries are normally restricted to family members and dependents
  • The maximum amount of cover allowable can depend on your remuneration and age

Who are relevant life policies suitable for?

  • Company Directors that would like their company to pay for their life cover and offset the premiums against corporation tax
  • Small businesses that do not have enough eligible employees to warrant a group life scheme
  • Directors of small limited companies that may be thinking of putting Key Person cover in place so that their company can pay the premiums on their cover
  • High-earning employees or directors who have substantial pension funds and do not want their benefits to form part of their lifetime allowance

They are not suitable for the self-employed or equity partners, although their employed staff could be covered.

Free Quote Calculate your cover

Shareholder Protection Insurance

This type of policy helps businesses continue effectively on the death of a shareholder (or a Partner in a Partnership) by releasing a lump-sum that allows other shareholders to buy the shares and provide fair-value funds to the surviving spouse.
Read more

In the interests of financial security, business stability and continuity, it is essential for private limited companies to provide a safety net following the death of a shareholder.

Shareholder Protection is usually put in place to ensure that, on the death of a shareholder, their shares are available for the other directors to buy and there is sufficient cash available to buy the shares.

This is normally done by:

  • Taking out a life insurance policy for each director to the value of their shares
  • Placing these life insurance policies in trust so that any payout is available to the remaining shareholders without any tax implication
  • Setting-up a Cross Option Agreement between the shareholders so that if the options are exercised, the holder of the shares must sell them and the other directors must buy them

The risk of not setting up some Shareholder Protection are as follows:

  • Shares may go to the deceased’s family, which has no interest in the business and may prefer a cash lump sum
  • The company or other shareholders may not have the resources to retain control by buying the deceased’s shares
  • The shares may be taken over by someone who does not share the company’s objectives, and they may even be a competitor

Free Quote

Can’t decide?

For free advice, speak to a UK based adviser on
0333 987 3960* (9am-5pm Mon-Fri)

The telephone service is provided in partnership with BQI Protection Ltd and the quotation service is provided by an FCA-authorised insurance specialist

What is Group Life Insurance?

Group Life Insurance, also known as Group Life Assurance or Death in Service benefit, is a policy taken out by an employer to cover a group of employees. If an employee dies while covered under the policy, a tax-free lump sum is paid out to their beneficiaries (usually their family or dependents). The policy is typically arranged as part of an employee benefits package and is often provided at no cost to the employee.

Key Features:

  • Coverage: Provides a lump sum payment in the event of an employee’s death.
  • Beneficiaries: The payout is made to the employee’s nominated beneficiaries.
  • Tax Efficiency: The payout is usually tax-free for the beneficiaries.
  • Employer-Funded: The policy is typically paid for by the employer, though employees may contribute in some cases.

Get a FREE Group Life Insurance Quote

Need Help?

For expert advice, speak to a UK-based adviser on
0333 987 3960* (9am-7pm Mon-Fri)

Our team of experienced advisers can help guide you through the options and provide access to the best deals in the market.

How Does Group Life Insurance Work?

Policy Structure:

  • The employer takes out a master policy that covers all eligible employees.
  • Employees are automatically enrolled, often without the need for medical underwriting (depending on the policy).
  • The policy remains in force as long as the employer continues to pay the premiums.

Payout:

  • If an employee dies while covered by the policy, a lump sum is paid out.
  • The payout is usually a multiple of the employee’s salary (e.g., 2x, 4x, or more).
  • The beneficiaries can use the payout for any purpose, such as paying off a mortgage, covering living expenses, or funding education.

Eligibility:

  • Typically, all permanent employees are eligible, but some policies may exclude part-time or temporary workers.
  • Employers can often extend coverage to spouses or partners for an additional cost.

Benefits of Group Life Insurance

For Employers:

  • Attract and Retain Talent: A strong benefits package, including Group Life Insurance, can make your company more attractive to potential employees.
  • Tax Efficiency: Premiums are usually tax-deductible as a business expense.
  • Employee Wellbeing: Demonstrates care for employees’ financial security, boosting morale and loyalty.

For Employees:

  • Financial Security: Provides peace of mind knowing their loved ones will be financially supported in the event of their death.
  • Tax-Free Payout: The lump sum is typically free from income tax and inheritance tax.
  • No Medical Checks: Most policies do not require individual medical underwriting, making it accessible to all employees.

Get a FREE Group Life Insurance Quote

Key Considerations for Employers

Coverage Level

  • Decide on the level of coverage (e.g., 2x, 4x, or 6x salary).
  • Consider the financial needs of employees’ families when determining the multiplier.

Eligibility Criteria

  • Define which employees are eligible (e.g., full-time, part-time, or temporary workers).
  • Consider including spouses or partners if appropriate.

Policy Exclusions

  • Understand any exclusions, such as deaths resulting from risky activities or pre-existing conditions.

Cost

  • Premiums are based on factors like the number of employees, their ages, and the level of coverage.
  • Shop around for competitive quotes and consider working with a broker to find the best deal.

Trust Arrangement

  • Many Group Life Insurance policies are written under a trust, which ensures the payout is made quickly and efficiently to beneficiaries.
  • Setting up a trust can also help avoid inheritance tax on the payout.

Tax Implications

For Employers:

  • Premiums paid for Group Life Insurance are generally tax-deductible as a business expense.

For Employees:

  • The lump sum payout is usually tax-free for beneficiaries.
  • If the policy is written under a trust, it can help avoid inheritance tax.

Get a FREE Group Life Insurance Quote

How to Choose the Right Policy

Assess Your Needs

  • Consider the size of your workforce, their demographics, and their financial needs.

Compare Providers

  • Obtain quotes from multiple insurers and compare coverage, exclusions, and costs.
  • Consider working with an insurance broker who specializes in Group Life Insurance.

Read the Fine Print

  • Understand the terms and conditions, including any exclusions or limitations.

Set Up a Trust

  • Ensure the policy is written under a trust to streamline payouts and minimize tax liabilities.

Communicate with Employees

  • Clearly explain the benefits of the policy and how it works.
  • Provide guidance on nominating beneficiaries.

Frequently Asked Questions (FAQs)

Q: Can employees opt out of Group Life Insurance?

A: Typically, employees cannot opt out if the policy is employer-funded. However, they can decline to nominate beneficiaries.

Q: What happens if an employee leaves the company?

A: Coverage usually ends when an employee leaves the company. Some policies may offer portability or conversion options.

Q: Is Group Life Insurance suitable for small businesses?

A: Yes, Group Life Insurance is scalable and can be tailored to businesses of all sizes.

Q: Can the policy be customized?

A: Yes, employers can often customize coverage levels, eligibility criteria, and additional benefits.

Summary

Group Life Insurance is a valuable employee benefit that provides financial security to employees and their families while offering tax advantages to employers. By understanding the key features, benefits, and considerations, you can choose the right policy for your business and enhance your employee benefits package. Whether you’re a small business or a large corporation, Group Life Insurance is a cost-effective way to demonstrate care for your employees and protect their loved ones.

Get a FREE Group Life Insurance Quote

Now’s the time to protect your loved ones...

A British Life Company

Get Insured within 20 Minutes

It is possible to be protected with a life insurance or critical illness policy within 20 minutes provided the insurer does not require a GP report or medical.

A GP report or medical is normally required for large amounts of cover (over £400,000), or if your BMI is over 30, or you have any significant ongoing or past medical issues, or if you are involved in dangerous job or high risk hobby.

Calculate Your Cover

Find out how much cover you might need by using our simple online calculator. It will take into account your outstanding mortgage, any loans or credit cards, your monthly income and how many children you have.

Ultimately the right amount of cover is often a balance between what might be an ideal figure and what you can sensibly afford.

Calculate your cover here

Personal Service

We have tracked down the very best protection insurance advisers in the UK to ensure you have access to great advice and the best products from the leading insurers.

Instead of pushy sales people, our advisers offer a more personalised service to guide you through the process and ensure you enjoy lasting peace of mind by making an informed choice.

The Service You’ll Receive

Outstanding service and knowledgeable customer service rep. I received a call as promised in my email. Marie was very knowledgeable in her subject matter, she took some basic details and was very polite and courteous in her manner.

Marie was very sensitive when discussing personal circumstances and listened carefully and showed...

N Marsden

Other possible options...

Group Life Insurance

This type of policy (also known as Death-in-Service Insurance) provides cover for all employees across a business in the event of the death of one or more employees, whether working in the business or at any other time. It is particularly advantageous to employees who might struggle to gain life insurance on a personal basis as the underwriting is based on the number and age profile of the employees, not their lifestyle or medical history.
Read more

Features:

  • Coverage for Employees: Group life insurance provides a lump sum payment to the designated beneficiaries of an employee in the event of their death during the coverage period. The coverage amount is typically based on a multiple of the employee's salary or a fixed amount chosen by the employer.
  • Group Coverage: Group life insurance covers a group of employees under a single policy, making it a cost-effective option for businesses. It simplifies the administration process as employees are enrolled automatically without the need for individual underwriting.
  • Flexible Coverage Options: Employers can choose different coverage levels based on their budget and the needs of their workforce. They can select a flat benefit amount or a multiple of the employee's salary.
  • Optional Add-ons: Some group life insurance policies offer additional options, such as spouse or partner coverage, which provides a benefit to the employee's significant other in the event of their death.

Benefits:

  • Financial Protection for Employees' Families: Group life insurance ensures that employees' families receive a financial safety net in the event of the employee's death. The lump sum payment can help cover funeral expenses, mortgage or rent payments, outstanding debts, and ongoing living expenses.
  • Employee Retention and Recruitment: Offering group life insurance as an employee benefit can enhance the overall benefits package, making the company more attractive to current and potential employees. It demonstrates the employer's commitment to the well-being of their workforce.
  • Peace of Mind: Group life insurance provides peace of mind to employees, knowing that their loved ones will be financially protected if they pass away. This can contribute to a positive work environment and employee satisfaction.
  • Tax Efficiency: In the UK, group life insurance policies are usually tax-efficient. The premiums paid by the employer are generally tax-deductible as a business expense, and the benefits received by employees' beneficiaries are usually tax-free, subject to certain conditions.
  • Supportive Bereavement Services: Some group life insurance policies provide additional support services for employees and their families, such as bereavement counseling or access to helplines for emotional support during difficult times.

It's important for businesses to carefully consider their specific needs, consult with insurance providers, and review policy terms and conditions to select the most suitable group life insurance coverage for their employees.

Free Quote

Key Person Insurance

This type of policy protects businesses financially if a key individual within the business (typically a company director) dies or can no longer act in any capacity with immediate effect in the event of serious illness. It is often required by lenders to cover the full repayment of a loan. It is an important consideration for many small and medium-sized businesses.
Read more

Key Man Insurance or Key Person Insurance is essentially a form of life insurance for businesses. It is generally taken out by a business to compensate for financial losses that would arise from the death or extended incapacity of the key individual(s) of the business specified in the policy, and in turn ensure the continuity of the business.

There are generally three categories of loss for which Key Man Insurance can provide compensation:

  • Protect losses related to the extended period when a key person is unable to work by providing temporary personnel and, if necessary, financing the recruitment and training of a replacement.
  • Protect profits such as offsetting lost income from lost sales or contracts; or losses resulting from the delay or cancellation of any business project that the key person was involved in; or loss of opportunity to expand, loss of specialised skills or knowledge.
  • Protect business & director loans, overdrafts or investments. The value of insurance arranged can be used cover their repayment in full, or to assist in generating continued profit (as above) to help make any monthly payments.

As a result, a Key Man or Key Person can be anyone directly associated with the business whose loss can cause financial strain to the business. For instance, they could be a Director of a company, a Partner, key sales people, key project managers and people with specific skills or knowledge which is especially valuable to the company.

Free Quote

Directors Life Insurance

This type of policy (also known as Relevant Life Insurance) can provide a complete tax-free solution to life insurance for company directors where both the premiums and the lump-sum payment in the event of a claim are tax-free. The premiums are not classed as a benefit-in-kind and, if the policy is written into a discretionary trust, then any payout is not subject to inheritance tax.
Read more

Life Cover for Company Directors (known as a Relevant Life Policy) is a way of providing death-in-service benefits on an individual basis no matter how small your business is. They are not classed as a ‘benefit in kind’ so no tax is payable on the premiums. In most cases the benefits can be paid free of inheritance tax provided the benefits are payable through a discretionary trust.

If you’re a company director and you already have life insurance in place to protect your family, you could be paying more tax than you need to.

What are the benefits?

  • Although the company pays the premiums, they are not normally assessable to income tax on the employee as a benefit-in-kind. This can be a significant saving, particularly for a higher-rate taxpayer
  • Unlike a registered group scheme, the benefit will not form part of the employee’s annual or lifetime pension allowance

What are the advantages of using a discretionary trust?

  • There are restrictions as to whom the benefits of a Relevant Life Policy can be paid, but the use of the trust is the most practical way of ensuring these restrictions are met. The beneficiaries who could be included are usually family members and dependents
  • Having benefits paid through a trust ensures they cannot be taxed as part of the company’s trading income, nor do they form part of the company’s assets
  • The trust is discretionary, allowing trustees to be flexible as to whom they pay benefits. However the employee can advise the trustees of his or her intentions by completing a nomination form. Although this is not legally binding on the trustees, it helps to guide them. The trustees will normally be the directors of the company
  • Using a trust also ensures that in most circumstances benefits are paid free of both income tax and inheritance tax
  • The maximum cover differs across insurers: for example, Bright Grey offer a figure up to 15 times the employee / director’s remuneration. This can include salary, regular dividends paid in lieu of salary and any benefits in kind

Are there any limits to the cover I have?

  • The legislation does have some limits to qualify for the tax concessions, and to ensure these are met, it requires that:
  • The cover must be paid in a single lump sum before the age of 75
  • Only Death & Terminal Illness benefits can be provided
  • Benefits must be paid through a discretionary trust
  • Beneficiaries are normally restricted to family members and dependents
  • The maximum amount of cover allowable can depend on your remuneration and age

Who are relevant life policies suitable for?

  • Company Directors that would like their company to pay for their life cover and offset the premiums against corporation tax
  • Small businesses that do not have enough eligible employees to warrant a group life scheme
  • Directors of small limited companies that may be thinking of putting Key Person cover in place so that their company can pay the premiums on their cover
  • High-earning employees or directors who have substantial pension funds and do not want their benefits to form part of their lifetime allowance

They are not suitable for the self-employed or equity partners, although their employed staff could be covered.

Free Quote Calculate your cover

Shareholder Protection Insurance

This type of policy helps businesses continue effectively on the death of a shareholder (or a Partner in a Partnership) by releasing a lump-sum that allows other shareholders to buy the shares and provide fair-value funds to the surviving spouse.
Read more

In the interests of financial security, business stability and continuity, it is essential for private limited companies to provide a safety net following the death of a shareholder.

Shareholder Protection is usually put in place to ensure that, on the death of a shareholder, their shares are available for the other directors to buy and there is sufficient cash available to buy the shares.

This is normally done by:

  • Taking out a life insurance policy for each director to the value of their shares
  • Placing these life insurance policies in trust so that any payout is available to the remaining shareholders without any tax implication
  • Setting-up a Cross Option Agreement between the shareholders so that if the options are exercised, the holder of the shares must sell them and the other directors must buy them

The risk of not setting up some Shareholder Protection are as follows:

  • Shares may go to the deceased’s family, which has no interest in the business and may prefer a cash lump sum
  • The company or other shareholders may not have the resources to retain control by buying the deceased’s shares
  • The shares may be taken over by someone who does not share the company’s objectives, and they may even be a competitor

Free Quote

Can’t decide?

For free advice, speak to a UK based adviser on
0333 987 3960* (9am-5pm Mon-Fri)

The telephone service is provided in partnership with BQI Protection Ltd and the quotation service is provided by an FCA-authorised insurance specialist