Group life insurance is set up as a single scheme that covers a group of employees within a business. Many companies offer group life insurance to employees as “death in service” benefit, which assumes the sum assured as a multiple of the employee’s salary.
It is possible to purchase life insurance for each of your employees individually however businesses usually take out a group life insurance scheme to cover all of their employees. Group Life schemes can be set up on a stand alone basis or can be linked to your company pension scheme.
Group life insurance pays out a lump sum death benefit to your employees’ family or next of kin should that individual die whilst working for your organisation.
It works in the same manner as a regular life insurance policy by paying out a predetermined sum if the policyholder dies within the term of a policy. This is usually based on a multiple of each employee’s salary – for example 2, 3 or 4 x salary. The benefit is tax free provided it is not more than the employee’s available lifetime allowance - £1.8million in 2011-12.
With death in service benefit the employee must be employed by the organisation still at the time of their death in order for the benefit to pay out. Death in service schemes usually run until the employees normal retirement age. If an employee takes time out from their career or leaves the company for any reason they will no longer be covered.
Endsleigh’s team of employee benefits experts can work with you to arrange group life insurance that ensures your employees’ families and loved ones are protected should the worst happen.
