Group life insurance explained
How valuable is Group Life Insurance?
For those who have a family or vulnerable dependents, the answer is probably: it’s priceless.
Group Life Insurance is a cost-effective way for employers to support their employees' financial security and in doing so provide a financial safety net if an employee suddenly dies. Easing any money worries during an extremely difficult time. It should be seen as proactively supporting, rewarding and inspiring all employees.
In this article, we delve into the details of this highly-valued employee benefit before explaining the benefits for employers and their staff.
What is a Group Life Insurance policy?
Group Life Insurance is a policy that pays out a lump sum if an employee dies whilst in your employment. Your employees can choose for their family or other dependents to receive the payment. The death benefit can be used to pay for funeral costs, pay off debts like a mortgage or other loans, or do anything else they may need to do. Many group life policies also can include access to bereavement support for dependents.
The group life insurance for employees is considered a “group” insurance policy because the insurance is bought “in bulk” covering all the individuals specified by the employer. By buying insurance in bulk, the rates are lower than buying individual policies, thereby making the premium more affordable.
Also important is that a group life policy does not discriminate an individual’s health history. Employees aren’t usually required to undergo medical examinations or underwriting. Typically cover is available instantly once the policy is set up. Also Group life cover is available for as few as three employees.
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Why choose Group Life Insurance?
Group Life Insurance has some great benefits for you and your employees.
Benefits For Your Business
1. Attract staff
Offering Life Cover to your employees is an attractive employee benefit, particularly if other companies within your industry are not doing so. It can be a great incentive when hiring, potentially increasing the number of candidates you attract and may give you the choice of the best talent around. It positions your company as a caring company.
2. Retain staff
Staff really benefit from the peace of mind that their loved ones will be cared for should the worst happen - Group Life Insurance reduces the risk of financial ruin should the household lose a key breadwinner overnight. This sense of security is a powerful incentive to remain loyal to your company.
3. Company Finances
Group life insurance is tax efficient. It’s not considered a benefit in kind, so there is no income tax to pay on the life insurance cover for your employees. And the premiums you pay as an employer are usually eligible for corporation tax relief.
Benefits For Your Employees
1. Financial support
Should an employee die in service, the lump is paid out fast and usually falls outside their estate, meaning it’s free from any inheritance tax liability
2. Peace of mind
This policy helps employees feel valued and brings a sense of security, as employees can be confident that their dependents will not face financial hardship should the worst happen to them.
3. Maintain productivity and creativity
By taking away financial concerns, your employees are able to get on with their work with more confidence. When they are happier at work, they are likely to be more creative and more productive.
Reduce risk, build loyalty
Group Life Insurance works well to retain staff by reducing the risk of financial hardship should an employee suddenly pass away, you demonstrate you care for your team’s financial security and build a loyal workforce. The Group policy is an affordable solution for a valuable staff benefit.
