Group Risk Products

Group Life Insurance:

Group Life Cover (GL) is the most common employer sponsored benefit in the UK and often represents the sole life insurance provision for low to middle income individuals.

GL provides a benefit on an employee’s death in service. This can be a lump sum payable to nominated beneficiaries or a taxable pension payable to the employee’s spouse, civil partner and/or other financial dependants, or both. A Group Life Insurance policy can be put in place by the trustees of a pension scheme to cover the scheme’s liabilities for death in service benefits or by an employer to cover a contractual promise outside of a pension scheme to pay a benefit on an employee’s death in service.

Within a flexible benefits package a core benefit of (say) 2 times salary can be put in place with options for an employee to choose a higher or lower multiple.

Most Group Life Insurance policies operate within HM Revenue & Customs' regulatory framework for a “registered occupational pension scheme” (which includes arrangements set up to provide benefits on death in service only). Generally, premiums paid by an employer can be offset against corporation tax and are not regarded as a benefit in kind. Lump sum death in service benefits can normally be paid tax free up to the Lifetime Allowance introduced under the simplified tax regime for pensions from 6 April 2006.

It is possible to provide death in service benefits in excess of the Lifetime Allowance but expert advice is required to maximise tax efficiencies.

Expert advice should always be taken when setting up a group insurance scheme to ensure optimum cover is provided and all tax efficiencies are maximised.