The core products in the group market comprise:
Click on one of the links below for a definition of that term:
This kind of insurance is designed to provide a replacement
income if illness or injury prevent someone from working for a
long period of time.
Mostly it is used by an employer to finance an entitlement to
occupational sickpay which arises out of the contract of
employment issued to their staff.
The employer gets corporation tax relief on premiums. Benefits
are paid to them to be forwarded to the employee through their
payroll system. The employees pay income tax and NI
contributions on the occupational sickpay they receive.
It is possible for the employer to insure pension
contributions and NI contributions in addition to the basic
income benefit.
The insurance benefit becomes payable when the member has been
ill for some while . Benefits become payable after the end of
that waiting period which is known as the deferred period.
Typically this will be about 6 months but longer or shorter
periods are available.
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Group CI cover pays a lump sum on the diagnosis of one of a
defined list of serious conditions, many of them life
threatening. Benefits are typically provided for the staff by
the employer who gets corporation tax relief on the premiums.
The employees receive a P11D assessment for the level of their cover.
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Group life assurance can be written as pensions business
attracting certain tax advantages or as an unapproved scheme.
In both cases employers get tax relief on the premiums, but in
the case of an unapproved scheme the employee suffers a P11D
charge.
Approved business can provide benefits within closely defined
limited set up by the Inland Revenue. Up to 4x salary and up
to 4/9ths salary as a dependence pension can be insured. The
maximum salaried count is restricted by the pensions cap.
Unapproved schemes attract P11D charge on the members at
potentially a chargeable event on the 2nd death.
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Group schemes cover all of a defined category of people and
consequently the insurer is less concerned that the purchaser
has an immediate intention to claim than would be the case
with an individual policy . The insurer is dealing with a more
or less random sample of people and at least for those with
average levels of benefit, the simple laws of statistics
apply.
* Evidence of good health is only required for those
members of the group whose benefits exceed a threshold level.
* All members would obtain the benefits up to the free
cover limit irrespective of their state of health.
Those whose benefits exceed the free cover are underwritten
because:
1. They tend to be those who have responsibility to decide
whether to take out the insurance and thus might be doing it
for their own benefit , and
2. Their benefits over the free cover are untypically high
and whilst the underwriter may know a certain proportion of
members may claim, if it happens to be one of those with high
benefits, the ends up paying a claim which is not typical of
the group.
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