When you think of exciting employee benefits or employee reward packages, group life assurance is most likely not at the top of the list. Whilst a company car or private medical insurance may seem more attractive, a group life assurance scheme will be more affordable, and a more valuable benefit in a time of need. Group life assurance could be the perfect finishing touch to a benefits package and there is no doubting it is a cost effective way to reward your employees.
What is group life assurance?
A group life assurance scheme is essentially life insurance taken out by an employer on their employees as a group and is also known as ‘death in service’ life assurance. It provides life assurance for your employees at a much lower cost than they can buy individually and there are free cover limits with no underwriting requirements. It means that should an employee pass away, their nominated beneficiaries receive a tax-free lump sum to help them cope at a time of great loss and need. The sum insured is normally based on a multiple of the employees’ salary, typically between 2 and 4 times their salary, but it could be as low as one times or as high as ten times. Policy benefits can be adapted to suit any company’s needs and budget.
How will it benefit the business?
- Gaining and keeping the right staff - In a world of online job boards, recruitment agents, head-hunters and ever ambitious millennials, an attractive staff benefits package has never been more important. Many companies are offering a variety of rewards, making it difficult to compete for the best talent without them. Group life assurance is an essential part of any rewards package. Group life assurance is much cheaper than personal life insurers because of the administrative savings made by insuring a number of people under one policy. Therefore the perceived benefit by the employee will likely be far greater than the actual cost incurred by the employer.
- Affordability – Group life assurance is more affordable than you might think. Policies can be adapted to suit any budget and will usually cost less than 1% of payroll. Furthermore, the premiums can be offset against corporation tax.
How will it benefit my employees?
- Peace of mind – When a family depends on an individual for their livelihood it can suffer a huge burden if that person dies. Employees benefit from the peace of mind knowing that their loved have some financial protection should they no longer be able to provide. Employees are attracted to work at companies that demonstrate they care about their staff. Providing group life assurance as part of a benefits or reward package demonstrates employers care.
- No tax – The premiums paid by the employer are not classed as a benefit in kind and the lump sum payment in the event of a claim is not subject to income tax or inheritance tax.
- No medical underwriting - Employees do not normally have to undergo medical underwriting where the free cover limit does not exceed the multiple of their salary or sum insured. This is something most employees will find very attractive, especially if they have had health issues in the past.
In a nutshell, group life assurance is a cheap yet perceived to be a highly valuable benefit for employees, often acting as an incentive as part of a benefits package for new staff to join your business and making existing employees think twice about leaving for fear of losing their benefits.