Most insurance an organisation may purchase will cover the assets or finances of the business in the event of a loss. However like employer’s liability, life insurance covers one of the most important assets that you have – your staff and their families.
Group Life insurance, or Death in Service as it is sometimes called, will make a one-time payment if a member of staff, volunteer or contractor insured on the policy passes away unexpectedly whilst working for you. This is one way you can ensure the family of the person who has worked for you is supported through one of the toughest times in their life. It is also something which can be included within a organisation’s employee benefits package and add more value when recruiting for roles.
A lot of people may not take out life insurance for themselves because they feel that it is too expensive, too complicated to join or simply they don’t think at their age it is something they need to prioritise.
Did You Know?
Providing your staff with life insurance could mean that in the event of an employee’s death the remaining family members can still pay the mortgage or rent and continue to live as normally as possible without the added worry of not being able to pay the bills, childcare costs or having to move. And so, the relatively small cost to the organisation can mean the world to a grieving family
At Banner Financial Services we try to make the joining process and administration of a scheme as straightforward as possible and do not require medical screening for our Group Life Insurance scheme. The only thing that could affect your employee’s application are existing medical conditions and even under these circumstances we can still offer coverage for a lot of conditions.
An individual can also make applications themselves which can then be tailored to their specific circumstances. There are several options available and covers to suit most people. If individuals are concerned about protection provision, then it might be useful for them to seek professional advice for their specific circumstances. There are insurance covers providing a lump sum on being diagnosed with a critical illness or a family income benefit paid monthly and a review with advice can help identify which is more appropriate. There is no limit on the amount of life insurance an individual can purchase and top up covers are also available if someone requires additional cover in excess of the cover provided under an Group Life scheme.
Speak to Banner Financial Services if you would like an individual life insurance quotation or simply more information about offering this benefit as a standalone benefit or to sit alongside a pension scheme. Insurers often provide additional services such as bereavement support which can form part of the organisation’s employee support programme.
The Technical Bit
You may already purchase a business travel or liability insurance which includes personal accident benefits and therefore provides a lump sum pay out in the event of death. Most of these policies will, however, exclude death by natural causes, and so should a person suffer a heart attack and die, the only way to have provided a benefit for the family would be through a life insurance policy. It should be noted that under the terms of most policies drug or alcohol related deaths and suicide are usually excluded.
A lot of providers for Group Life Insurance, place the policy in a trust – known as writing life insurance ‘in trust’. There are many benefits to writing a policy in trust; one of the predominant reasons is that the relationship is between the insurer and the trustees rather than any individuals. A claim is then paid to the trustees who can make a payment to the beneficiaries rather than to the estate of the deceased – this can mean payments are made considerably faster. There may also be benefits to individuals from a taxation perspective as there is potential that no individual will have to pay Inheritance Tax on the benefits.
If the cover is written into trust then a documented expression of wishes is often helpful, highlighting the beneficiaries and any desired split of the payment. Expression of wishes can be used for Group Life schemes and individual policies.
How is Life Insurance Calculated?
Most policies will be based on the level of cover you would want for your staff, this is often a multiple of their salary and usually will not exceed 10 times. The staff members age and pre-existing medical conditions may also be taken into account and may require the applicant to complete a medical history form. It is important to note that in some cases where there is a long term or terminal medical condition the premium may be significantly higher or cover declined altogether. At Banner Financial Services, we offer set ratings that are not affected by age, meaning someone aged 25 without any medical conditions would be charged the same as someone aged 55 who doesn’t have any medical conditions. The policy will cover anyone up to the age limit of 70 years old.
Case Study
Mrs D had been with her employer for over seven years and they had provided her with life insurance since joining. She had always been fit and healthy and had therefore only had to complete a basic medical application when joining the scheme. 5 years after joining the scheme she was diagnosed with cancer and very sadly 2 years later she passed away leaving her husband and 2 children. As a result of having life insurance cover through her employer, her family received £35,000. This sum paid for the costs of the funeral and helped the family to take some time together to support each other through such a difficult time without having the added financial worry about the change to the household with the reduced income. Nothing can prepare anyone for the loss of a family member but at least by having some life insurance the financial burden at such a testing time can be relieve
Need more help?
Speak to a member of our specialist insurance team today on