What is Group Life Insurance?
Group life insurance – sometimes known as death in service benefit – provides a tax-free lump sum to dependants of your employees in the event of their death while in your employment.
As the name suggests, one policy can cover all employees in your group, normally covering employees until they either leave your employment or retire.
However, this is flexible – for example, you may only want to cover certain staff, or up until a certain age. We can help you to guide you through setting up the right scheme for your needs, including talking through trust arrangements.
This is a tax efficient way of providing benefits, as not only are lump-sum payments made tax free, but premium payments made are normally not taxed as a benefit in kind.
How does Group Life Insurance work?
Each employee covered under your Group Life Insurance policy is entitled to a lump-sum life insurance payment in the event of their death while in your employment.
Employees can nominate a beneficiary for their life insurance. This can be a dependant, spouse, family member or other loved one.
Life cover – or death in service benefit – offers additional peace-of-mind that those nominated will not suffer financial hardship due to your employee’s untimely death.
Payments are normally a multiple of an employee’s salary – anything up to 12x their salary, but more commonly 4x (e.g. if your employee earns £25,000 per annum, 4x their salary will mean a lump-sum payment of £100,000 to the beneficiary). The payment is made tax-free, provided it is not more than the employee’s lifetime tax-free allowance.
What are the main tax benefits of Group Life Insurance for you and your staff?
Group Life Insurance can be tax efficient for both your employees and your business. Here’s how:
- No additional cost to employees – you pay for the benefit as their employer, and it isn’t a taxable benefit in kind for them (P11D benefit)
- No inheritance tax for dependents of employees to pay, as Group Life cover is commonly written into Trust
- Group Life cover is often eligible for corporation tax relief – potentially lowering the tax your business pays
Why choose Bollington for Group Life Insurance?
Bollington provides access to a full range of quality Group Life Insurance providers, including Aviva, AXA PPP, Bupa, Vitality and more.
We will help you to compare the cover available and find the right policy at the right price to meet your needs.
Furthermore, we can tie your Group Life Insurance into a wider Employee Benefits Package, with options for additional cover including Private Medical Insurance, Dental plans, Healthcare Cash Plans and more.
Simply call us on 0161 929 1851 for a conversation about how we can help you to create the best, most tax-efficient Group Life Insurance cover for your business.