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Group Life / Death In Service Insurance

Group Life Assurance or Death in Service schemes provide a lump sum death benefit for a company's employees in the event of death during the period of their employment. The benefit is typically set as a multiple of annual salary or pay and different benefit levels for directors, senior employees and other employees can be incorporated within the same scheme.

Where spouses and dependants "pensions" benefits are included, the death benefit of the employee is paid as a long term benefit to the spouse or dependant rather than as a lump sum.

"Free cover " limits mean on large schemes that no evidence of health will be required for most or all members joining the scheme providing they are actively at work on the day the scheme commences. Careful attention must be paid to employees who are temporarily or long term absent at commencement date of the scheme to ensure that they become members as soon as they become eligible and that the position of any members ineligible through long term absence is clearly understood..

The premiums for Group schemes are low compared with other types of employee benefits and administration is minimal. All that is needed is a full membership list including date of birth , salary and gender and a single annual premium is payable.

The premiums are allowable as a business expense to the company and the premiums paid are non taxable to the employee , as the benefit is considered discretionary, although the employee will usually make an expression of wish as to whom the benefit is to be payable in the event of his death.

New schemes need to be set up with Trustees to administer benefits when payable and Pensions Office approval is also necessary for new schemes, to ensure that benefits are receivable on a tax free basis. Benefits are payable immediately upon proof of a members death in service .

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