A study by the Social Policy Research Unit, University of York reported that one in five households dropped below the official poverty threshold following death of a partner. (Financial Implications of Death of a Partner, Anne Corden, Michael Hirst, Katharine Nice December for the Social Policy Research Unit, University of York).
Group Life Assurance pays out a lump sum benefit to your employees nominated beneficiaries (usually family) should they die whilst employed by your company. There are two options to choose from. The most common scheme is based on a multiple of salary, for example 2, 3 or 4 x an employees basic salary. The other option is a fixed sum amount, for example, everyone in the company is given £25,000 of Life Assurance regardless of their salary. The benefit is tax free providing the insured amount it is not more than the employees’ available lifetime allowance, this currently stands at £1m (this includes pension).
It is increasing common for Life Assurance schemes to include support services such as bereavement counselling. Employees complete a declaration of wish form stating where and who they want the Life Assurance payment to be made to in the event of their death.
How Is It Paid For?
This is a company paid benefit. The cost depends on the amount of cover you wish to provide, average age of employees and risk level of their occupation. Life Assurance companies usually grant something called a “Free Cover Level”. Up to this level no underwriting (medical questionnaires/declaration are required. If you are seeking cover over and above the Free Cover Level then underwriting and additional premiums may apply, or in some instances, certain causes of death may be excluded.
For Corporation Tax purposes Group Life Assurance can be treated as a business expense. The costs of company paid Life Assurance schemes are generally much lower than individual high street rates.
Why Offer This Benefit?
Life Assurance helps provide financial peace of mind for your employees, safe in the knowledge that their loved ones may be more financially secure in the event of their death. It is a benefit that many employees now expect to see in their benefits package. If you have a Group Life scheme currently in place ask for a free review.
It may also help employees in the event they seeking to take out a mortgage or borrow money for items such as cars on unsecured loans.