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Group Life Insurance
What is Group Life Insurance?
Group Life Insurance (often called a Death in Service benefit) is a company-sponsored life insurance scheme that provides a lump-sum payment to an employee’s nominated beneficiaries if they die while employed by the business.
It’s a valuable employee benefit that helps employers support their staff’s families financially in the event of a death, while also enhancing the company’s benefits package and staff retention.
How does it work?
Under a Group Life scheme:
- The employer arranges and pays for the cover on behalf of its employees.
- Each eligible employee is automatically covered, usually for a multiple of their annual salary (for example, 2x, 3x, or 4x salary).
- The policy pays a tax-free lump sum to the employee’s nominated beneficiaries if they die while on the payroll — whether at work or not.
The scheme can cover all employees or specific groups (e.g., directors, senior management, or certain departments).
Most policies are written under a discretionary trust, ensuring that the benefit is:
- Paid quickly to dependants.
- Excluded from the employee’s estate for inheritance tax purposes.
- Not counted as a benefit in kind for income tax.
Tax treatment
- Premiums are usually an allowable business expense for the employer, provided they meet the “wholly and exclusively for business purposes” rule.
- There is no benefit-in-kind tax for employees, as the policy is not treated as a personal benefit.
- Payouts are typically free from income tax and inheritance tax when held under trust.
Who is it for?
Group Life Insurance is ideal for:
- Businesses of any size wanting to provide cost-effective employee benefits.
- SMEs looking to offer a “death in service” benefit without setting up complex pension-linked schemes.
- Employers who want to demonstrate a commitment to employee wellbeing and financial security.
Complete the form
Submit the details of your insurance requirements here