We speak to many of our small business owning clients about group life insurance and we find many people are in the dark as to what it actually is and how it can benefit their business. In this blog we share the answers to many of their questions.
What is group life insurance?
Group life insurance is a policy that small business owners can take out to cover everyone who works for the business. If they die while still employed by you the policy will pay out a lump sum to the named beneficiaries. The lump sum would usually be either a multiple of their salary or a fixed sum. Their death doesn’t need to be related to their work, and may include death by natural causes at home, for example.
Who can benefit from it?
Your employees can benefit from peace of mind in having life cover that they don’t have to pay personally for. Their families will benefit from a fixed lump sum if they die while working for you. As the employer you will be seen as offering a generous employee benefit which need not cost a great deal to provide. You may also add other health benefits to the policy, which may reduce absenteeism or get your employees back to work sooner if they are off sick
Why should I offer it?
In a competitive recruitment market, group life insurance can be a great employee benefit to offer as part of your overall benefits package. If you are trying to attract and retain experienced staff with families and responsibilities, it can be seen as a particularly valuable benefit.
Is it the same as death in service benefit?
Yes, many companies use this phrase, but it’s the same thing.
Does a group insurance policy cover my freelancers or subcontractor?
It would normally only cover those with an employment contract.
What other benefits may come with employee life insurance?
As part of the overall package you may also wish to offer health benefits to your employees, such as physiotherapy or counselling sessions. This may be particularly useful if your employees do a very physical job or one that involves stressful situations. Other benefits may include private health cover or access to a GP and you can cover your employees as well as their immediate family members. As the employer you can structure the policy to offer the benefits you find most appropriate to your team.
How much does it cost to have a group life insurance policy?
This will depend a great deal on your workforce, how many people you have, their ages and the industry you work in, as well as which benefits you choose to include on your policy. You may want to work to a particular budget and adjust the cover to suit that.
How does independent financial advice help in choosing the right policy?
There are very many insurance companies who provide group life insurance policies, and it can take time and expertise to find the right policy to suit your business. An independent financial adviser can take a view of the market and present you with just one or two appropriate policies for you to discuss and choose from.
You can also ensure your insurance policy is consistent with your pension arrangements or any other financial benefits you already provide.
At Sheldon Flanders we are able to advise on group life insurance policies, as well as a number of other financial benefits for your workforce. Book an appointment to speak to us about your business requirements.