Group Life Insurance (GLI)
AKA: Group Life Assurance (GLA)/Death in Service
Financial support for your employee’s family in the event of their death.
av. £100 p.a
per £100k cover
What is a Group Life Insurance?
Provides a tax free lump sum to nominated beneficiaries in the event of the member’s death during employment.
Two kinds of group life schemes ‘Registered’ and ‘Excepted’ schemes. Excepted schemes are subject to Life insurance not pensions legislation, thus are not subject to Lifetime Allowance (LTA).
Often includes not just healthcare but contributions towards routine dental and optical costs.
Why GLA for your employees?
Reduce sickness and absence periods.
Enhance recruitment and retention.
Save money - group cover is typically lower cost than individual.
Drive employee loyalty through provision of a highly valued employee benefit.
Maintain a healthier, happier, more secure workforce.
Be a better employer and fulfil your ‘Duty of Care’.
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Policy terms that you can choose
Benefit basis Multiple of salary; usually up to 12x, or a fixed sum.
Definition of salary Basic annual salary or P60 earnings.
Policy terms set by insurer
Free cover level Level of benefit insured beyond which a member requires medical underwriting.
Forward underwriting limit For underwritten members, the increase in total sum insured beyond which a member will require re-underwriting.
Event limit (catastrophe limit) The max insurers will pay out in the event of multiple deaths from a single event.
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Policy structure & beneficiary payment FAQs
Q1. Does the policy have to be set up in a trust?
Yes. GLA policies are designed to pay benefit to discretionary trusts. The trust would then distribute benefit on to beneficiaries:
  • whilst protecting the benefit from 3rd parties
  • without having to wait for probate
  • without Inheritance Tax liability on the benefit
Q2. Do I have to set up the trust myself or can i partake in an existing trust?
An employer can set up their own trust or choose to use the insurer’s master trust.
Q3. What’s the difference between a ‘Registered’ and an ‘Excepted’ scheme?
Registered group life policies are set up under pension legislation, meaning lump sum benefits from life insurance get aggregated with those from other registered pension schemes and tested against the Lifetime Allowance (LTA). Any amount above LTA may be subject to tax.
Excepted group life policies are subject to life insurance legislation, not pensions legislation and are not tested against the LTA. However, the benefit is subject to the normal tax rules for discretionary trusts, meaning periodic charges and exit fees may apply, though usually no more than 5% max.
Policy structure & beneficiary payment FAQs
Does the policy have to be set up in a trust?
keyboard_arrow_down
Yes. GLA policies are designed to pay benefit to discretionary trusts. The trust would then distribute benefit on to beneficiaries:
  • whilst protecting the benefit from 3rd parties
  • without having to wait for probate
  • without Inheritance Tax liability on the benefit
Do I have to set up the trust myself or can I partake in an existing trust?
keyboard_arrow_down
An employer can set up their own trust or choose to use the insurer’s master trust.
What’s the difference between a ‘Registered’ and an ‘Excepted’ scheme?
keyboard_arrow_down
Registered group life policies are set up under pension legislation, meaning lump sum benefits from life insurance get aggregated with those from other registered pension schemes and tested against the Lifetime Allowance (LTA). Any amount above LTA may be subject to tax.
Excepted group life policies are subject to life insurance legislation, not pensions legislation and are not tested against the LTA. However, the benefit is subject to the normal tax rules for discretionary trusts, meaning periodic charges and exit fees may apply, though usually no more than 5% max.
Tax treatment
Typical tax treatment of these insurances, subject to your tax advisors and tax controller.
For employers
Corporation tax
Group Life Insurance premiums do qualify for corporation tax relief as a business expense.
Insurance premium tax
Group Life Insurance premiums are exempted from IPT.
For employees
P11d tax
Group Life Insurance is not subject to P11d benefit in kind tax.
Lump sum benefit
The lump sum benefit paid to beneficiaries is tax free.
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