Group life and illness cover for your employees

Group life cover – also referred to as ‘death-in-service’ benefit – is a type of insurance that employers can choose to have in place for their staff, to cover them throughout the duration of their employment. It essentially means that, if an employee dies, a lump sum is paid to their family or next of kin.

The amount paid in the event of death is usually calculated by multiplying the employee’s salary by two, three, or four. Usually the benefit is tax-free because the payment is unlikely to take an individual above the lifetime tax-free allowance.

This type of life cover usually runs until the employee retires or leaves the company. If the employee has a career break or leaves the company for any reason they will not be covered.

Unlike individual insurance policies, where the individual pays the premium and decides on the level of cover, with group life and illness cover the employer decides on the level of cover and pays any money due.

While employees can be covered individually, the majority of employers take out group life cover so all of their workers receive the same level of benefit.

Benefits for employers

  • Can be offered as part of an attractive benefits package, helping recruit and retain the right staff
  • Premiums will normally qualify for tax relief depending on scheme choices
  • Typically costs less than one per cent of payroll, depending on the level of cover

Benefits for employees

  • Security for them and their loved ones
  • Lump sum and pension benefits can be paid free of inheritance tax to nominated next of kin or family, without waiting for probate
  • This valuable cover is not classed as a benefit in kind

For more information on group life and illness cover, please contact us.