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Employers may promise certain benefits to employees as part of the contract of employment. Rather than bear all of this risk themselves, many employers choose to take out group risk insurance policies to cover some or all of their liability for death benefits, long term sick pay and critical illness benefits.
Provided in isolation or as part of a wider benefits package, group risk benefits can give employees access to insured financial protection cover they might not be able to either afford or access for themselves.
Group risk policies are commercial contracts which support employers in meeting their contractual promises and legal obligations to their employees.
The employer is generally the policyholder, pays the premiums and claims are made by the employer in respect of their employees. Generally any claim is paid to the employer (or often the trustees of the pension scheme in the case of group life assurance).
Group risk policies are generally taken out through an adviser who is responsible for helping the employer to decide on the design of the benefit structure, who will be covered by the policy, the suitability of the policy and the selection of a provider.
Expert advice should always be taken when setting up or reviewing a group risk insurance scheme to ensure that optimum cover is provided, any extra support services offered alongside the policy are used and all tax efficiencies are maximised.
Group Risk Products
Provides a benefit on an employee’s death
Represents 40% of all insured life cover in the UK
Tax free lump sum up to Lifetime Allowance
Taxable dependants’ pension
Benefits over Lifetime Allowance through “excepted” route
Provides a continuing income during employee’s absence for illness, injury or disability
Represents 80% of all insured income protection cover in the UK
Used to cover employer’s promise of long term sick pay
Paid through payroll in normal way
Pays a tax free lump sum to employee on diagnosis of one of a defined list of serious medical conditions or on undergoing one of a defined list of surgical procedures
Can be extended to dependants
Increasingly popular under flexible benefits arrangements
Fastest growing group risk benefit
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The opportunity to influence group risk policymaking.
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