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Put simply, Group Life Insurance (sometimes known as Death in Service Insurance) is a life insurance policy that covers your employees while they work for you. If one of your team members dies during their employment, the policy pays out a lump sum to their family or chosen beneficiary.
This isn’t just about a financial payout, it’s about providing support during the hardest of times. Group Income Protection is a popular part of employee benefits packages in the UK, and for good reason. It’s a smart, supportive way to show employees you value their wellbeing, not just while they’re on the clock.
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Advantages of Group Life Insurance for employers:
Advantages of Group Life Insurance for employees:
It’s a win-win for everyone. Employees feel valued, and you get to enhance your company culture without a heavy financial burden.
There are three major advantages of Group Life Insurance: care, culture, and cost-efficiency.
These advantages of Group Life Insurance also gives your business a competitive edge in attracting and retaining top talent. Many job seekers look for companies with comprehensive benefits packages, and Group Life Insurance is a standout.
The cost of Group Life Insurance depends on several factors:
But the good news? It’s generally far cheaper than you might expect. Many businesses are surprised at how affordable a policy can be—particularly when you consider the huge value it adds to your benefits package.
You’ll pay a monthly premium (often per employee), and in return, you’ll receive group coverage without the need for individual underwriting (up to certain limits). It’s predictable, scalable, and can be adjusted as your team grows.
The core purpose of Group Life Insurance is to provide a tax-free lump sum if an employee dies while employed by your business. The payout typically goes to their nominated beneficiary and is based on a multiple of their salary.
Some policies also offer:
It’s important to note that this isn’t the same as Personal Life Insurance as it only covers employees during their time with your company. But for many, that’s exactly what makes it so appealing.
It’s advisable to set a maximum amount of cover based on the employee’s gross annual earnings and age. For example, 17-29 years old may have remuneration of up to 35x, while employees over 60 years old may have remuneration of up to 15x.
The amount of cover for a Relevant Life plan should be based on the lost income of the employee, including their salary, bonuses, benefits in kind and regular dividends.
Group Life Insurance in the UK is typically offered as part of a company’s benefits package. The business sets up the policy and pays the premiums, which are usually based on employee salaries, age, and the amount of cover needed. You don’t need to worry about complicated medical underwriting, as cover is often automatically provided up to a set limit.
If an employee sadly dies while employed by you, the insurer pays out a tax-free lump sum to their loved ones, usually based on a multiple of their salary (e.g. 2x, 3x or 4x annual salary).
If you’re exploring broader business protection, this is also a good time to consider Key Man Insurance, Whole Life Insurance and Shareholder Protection, all of which are designed to protect your business from the unexpected.
The UK has a strong market for Group Life Insurance, with well-established providers offering robust cover and flexible options. Some of the top insurers include Aviva and Zurich. For smaller businesses or those looking for more tailored cover, there are a number of specialist providers out there too. Companies like The Exeter provide bespoke solutions tailored to individual requirements. And with competitive rates, they can be a great option for businesses looking for affordable protection.
At MyKeymanInsurance, we work with all major Group Life Insurance providers to find the best solution for your business. We’re independent, which means we compare quotes and policy options to suit your specific needs, whether you’re a five-person startup or a growing mid-sized firm.
Companies under 10 employees may not be able to offer group life insurance. In which case Relevant Life Cover may be more suitable.
Think Group Life cover is just for large corporates? Think again.
Group Life Insurance for a small business is now more accessible than ever. Policies can start from as few as three employees, and providers offer flexible packages that can scale with your team as it grows.
Common misconceptions include:
You can also tailor Group Life Insurance for a small business to suit your team’s needs, choosing the level of cover that fits your business budget. Whether you want to cover 2x or 4x salary, there are options that work for SMEs.
Good news! Group Life Insurance is typically not considered a P11D taxable benefit, meaning your employees won’t be taxed on it like other perks.
Even better, premiums you pay as the employer are usually treated as an allowable business expense for Corporation Tax purposes, making it tax-efficient for your company as well.
To maximise tax benefits and ensure your policy is structured correctly, we’ll help you set it up using a discretionary trust, this ensures the payout remains outside of the employee’s estate for inheritance tax purposes too.
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Jody was very helpful in explaining the options and I thoroughly recommend his company
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
I had a great time working with My Key Man Insurance when I applied for the different insurances they offer. They were able to answer all of my questions quickly and effectively. I will recommend them to my friends and family.
It is so amazing working with this insurance company. i have had many unpleasant experiences with some insurances company in the past but working with Mykey insurance has really change my opinion and believe about insurance company.
The standard of service was first class. They kept me up to date with progress on my Relevant Life Policy, followed up promptly following delays caused by my medical practice being slow in compiling reports, and responded instantly and clearly to any questions I had.
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
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You can usually set up a policy with just three or more employees. Some insurers offer flexible schemes for smaller teams and startups.
Yes. The terms are often used interchangeably, though “Group Life” is more commonly used by insurers.
It’s worth noting that some providers may also offer special rates and discounts for people who fall into certain age brackets or other criteria such as occupation or health status. It’s worth researching these options carefully so that you can get the best deal possible on your group life insurance policy.
Not typically. Most policies provide automatic cover up to a set amount without any medical underwriting.
This is up to you. The most common cover levels are 2x, 3x, or 4x annual salary, but it can be tailored to your business.
Very. Once your policy is in place, it’s easy to maintain, and your adviser can support you with any changes or additions.
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