Is group life insurance worth it, really?
Are you considering a Group Life Insurance Policy for your employees?
Wondering if it's truly worth the investment?
With the world dealing with a post-pandemic reality, and the high cost of living making things even tougher, the importance of life insurance as a vital financial safety cushion is clearer than it has ever been.
With only 35% of the UK population having personal life insurance, there is a real opportunity for employers to fill this gap and in doing so make their benefit offering an attractive package for potential top talent.
But how does Group Life Insurance work, and what benefits does it offer employees and their families in times of need?
Let's break it down by first understanding what we mean by a Group Life Insurance Policy.
What is a Group Life Insurance policy?
In short, it’s a shield for the unthinkable.
Group life assurance provides a benefit on an employee’s death in service. This can be a lump sum payable to nominated beneficiaries, a taxable pension payable to the employee’s dependants, or both.
Most group life assurance policies operate within HMRC’s regulatory framework for a ‘registered occupational pension scheme’. Lump sum death benefits can normally be paid tax-free up to the Lifetime Allowance.
Generally, premiums paid by an employer can be offset against corporation tax and are not regarded as a benefit in kind.
How important is this product?
The group risk industry paid out 11,592 death claims in 2020, valued at over £1.37 billion, according to the GRiD 2021 Claims Survey. This alone shows how often death-in-service happens, and how important it is to protect your staff.
The same report reveals that the average claim was £118,244 and the main causes for the claim were cancer (37%), heart disease (14%) and Covid-19 (8%). 167,000 people die of cancer and 168,000 people die of heart disease each year in the UK. The chances of these illnesses impacting your workforce are high.
You cannot anticipate events such as the Covid-19 pandemic happening, and with 8% of claims stemming from this horrendous disease, it's clear that there is a very real need for a benefit that can reduce financial risk for your employees’ families should unexpected events occur.
Group Life Insurance is a vital benefit, one that protects your employees’ families from financial risk and is highly prized by employers and employees alike.
How does Group Life Insurance work?
Understanding the mechanics is crucial.
A Group Life Insurance Policy for employees operates on a collective basis, covering a group of individuals under a single policy.
You, as the employer, purchase a master policy - a single contract that covers all eligible members of the employees that you are looking to cover. You then pay the entire premium. By spreading the risk across an entire group of employees, it becomes a cost-effective solution.
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Group Life Insurance advantages and disadvantages
Obviously, we think that Group Life Insurance is well worth the investment, but we don’t want to leave you in the dark. Exploring the pros and cons is essential if you are to make an informed decision, and our team always want to ensure you get the solution that best suits your circumstances.
So, here are the advantages and disadvantages of Group Life Insurance.
Advantages
- Financial security: it provides employees the assurance they need to know that their loved ones will be financially protected if they were to pass away.
- Affordability: Group insurance is designed to be a low-cost benefit for employers to provide for their staff
- Maintain productivity: By offering the certainty that their families will be taken care of in unforeseen circumstances, you alleviate any financial worries for your staff. This, in turn, empowers individuals to give their best in the workplace.
- Simplified administration: A group insurance product comes with the advantage of a single policy covering the entire group, making administrative responsibilities smoother and more straightforward for you.
Bravo Benefits: The trusted provider
With over 12 years of experience, you can trust Bravo Benefits to deliver a policy which meets your needs.
Whether it's transitioning existing policies or exploring new schemes, we're here to assist. Our consultation process ensures that we consider the specific requirements that you have for your workforce. Our team are experienced Insurance Advisors and can determine the type and level of cover needed for your business objectives to ensure that optimum cover is provided, any extra support services offered alongside the policy are used and all tax efficiencies are maximised.
At Bravo Benefits, our Employee Benefits Consultants invest time in understanding your needs and the makeup of your team. Following our Discovery Session, our experts then research and recommend the optimal employee benefits solution, guiding you through setup and implementation processes.
Is Group Life Insurance worth it?
Overall, we believe that Group Life Insurance is a great investment.
It delivers peace of mind, whilst offering a cost-effective approach to reducing financial risk for your staff.
While acknowledging the advantages and disadvantages, the overall impact on the wellbeing of your workforce makes Group Life Insurance a worthy consideration for any forward-thinking employer.
In the end, it's not just an insurance policy; it's a commitment to the people who drive your company's success.
