If an employee were to die unexpectedly, the life cover you put in place for them would help their family cope financially at a very difficult time. As an employee benefit, it can assist in attracting and retaining talent within your business, while at the same time demonstrating your duty of care as an employer.
Benefits are payable as a lump sum which is normally based on the employee’s earnings (up to around 12 x annual salary depending on the insurer) and can be tailored to meet the employer’s specific needs and those of their staff. Many insurers offer Master Trusts meaning the required trust can be set up at no additional cost. Another common feature offered is access to Bereavement Counselling and Probate Helplines again at no extra cost.
Lump-sum benefits paid to the Trustees of the Group Life Assurance schemes do not normally form part of the deceased member’s estate. This means that they are free* of inheritance tax and instead of having to wait for probate to be granted, the benefits can be paid almost immediately.
From the employer’s point of view premiums paid for a Registered Group Life scheme are allowable as a business expense. There is no P11D (benefit in kind) tax liability** for the employees for the premiums paid on their behalf.
*Tax concessions are not guaranteed and may change in the future. Tax free means the investor pays no tax.
**HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen