Group Life Insurance

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Group life insurance is a form of death in service cover for your employees

There are different ways to arrange life insurance for your employees through your organisation. Group life insurance is often a cost effective way to provide death in service cover to your team. Not only is this great for their financial security, it is also a really positive employee retention tool.

Our award winning advisers will help you determine the best way to protect your team.

What is Group Life Insurance?

Group Life InsuranceThere are a lot of technical aspects to group life insurance, far more than we can cover on this page, so here are some of the key things for you to know.

Some key parts for you to know:

  • From 2 people – Group life insurance can be arranged from as little as two people.
  • Levels of cover – This can be the same for everyone, or different for different groups. You could have every employee insured for £100,000. Or you could have Directors insurer for £150,000, Managers at 3 times their annual salary and everyone else at 1 times salary.
  • PAYE employees – To be eligible for most group life insurance policies there must be an employer and employee relationship, with the employee on the payroll and actively at work. It is sometimes possible to cover non-salaried partners and other non-employed members, but this is very much a case by case basis.
  • Premiums are paid for by the company – These can then usually be offset against corporation tax.
  • Anti-selection – A big rule of group is that you can’t anti-select who is and isn’t covered. The clearest way to explain this is that if there are 4 Directors, all 4 would need to be covered on the policy. You can’t not insure Director A because he ticked everyone off at the weekend.
  • Cost – You will probably surprised at how small the premiums are for life insurance when it’s for a group of people. The reason for this is what we in the insurance world refer to as ‘pooled risk’ aka insurance jargon.
  • After a Claim – The policy will continue to insure everyone else, just like it had done before the claim.

There are a lot more things that advisers will need to explain and check with you before arranging a group life insurance policy for you. Our industry trained advisers are here to help arrange the policy for you.

A Big Risk of Group Life Insurance

Group insurance is a brilliant way to provide cost-effective life insurance for your organisation. It can often act as a good employee retention too, with a lot of people now wanting to see more value from their employers.

When you arrange group life insurance there are two ways to do it: Excepted or Registered.

There are positives and cons to both of these approaches but here is a very quick rundown.


  • Pros – A successful payout is not added to the deceased person’s lifetime allowance. Being a member of this type of group life insurance does not affect a person’s protection pension status.
  • Cons – On the 10th, 20th, 30th…anniversary day of the policy Trust going live, there can be potential taxation on a claim payout if it’s in the Trust on those specific dates.


  • Pros – There should not be any taxation due on a successful claim on the policy.
  • Cons – A successful payout will be added to a person’s lifetime allowance, which could lead to taxation on the value of their pension. If a person is added to this type of group life insurance and they have protected pension status, they will immediately lose this protection and cannot get it back. This will lead to huge tax implications.

To fully understand which of these options is best for your organisation, we recommend speaking to one of our advisers who can go through all the technical aspects for you (with as little jargon as possible).

What if I have a Health Condition?

What is really interesting about group life insurance is that it comes with what is known as a free medical underwriting limit. This means that up to certain levels of cover the insurer will not take into account any ‘risks’ that they would usually ask about for personal insurance.

This can mean that people that would potentially have their premiums rated, or be postponed or declined life insurance if they applied personally, might be automatically covered by the group life insurance without their risk affecting the cover or ability to claim.

The free medical underwriting limit often starts at £500,000 per person. But, this can be linked to a maximum multiple of your salary and it’s important to check if your income level brings this figure down.

This can include health conditions, travel, occupation and sports.

That being said there are times that an insurer offering group life insurance might ask things such as ‘Have you had cancer, heart attack or stroke in the last 12 months?’ or ‘Do any of the employees travel to this list of locations?’ These questions are usually very limited and not all insurers ask them. This is why our advisers can be so useful to you, as we know where to place your group life insurance application to get the best terms for you.

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Review by Ray on 5th January 2023

Easy Straight forward and explained to me in plain English so I could understand legal and insurance terms. Strongly recommended. - 5 

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