Please note: This information relates to policies quoted after 28 September 2015.
These are some of the most frequently asked questions relating to Group Life.
Do I need to cover all of my employees?
You don’t have to cover everybody who works for you; you can choose to only cover certain categories of staff. However it’s also important to understand the implications of the Equality Act 2010, which prevents employers from discriminating against employees, job seekers or trainees on grounds of age, sex, race, religion and disability (amongst others). You may, however, want to introduce a fixed probationary period for your employees, before they are eligible to receive Group Life cover. Or you may decide to allow entry to your company’s scheme at certain points during the year, monthly or annually.
Does everyone have to be covered at the same level?
It depends on your structure. If you wanted to give roles different levels of cover you could group your employees into categories and then assign different benefit levels to each category. Directors or senior managers, for example, may be covered for a higher level of benefit than other groups.
Are my employees based overseas covered?
In most cases we will cover employees who are based overseas, as long as they have a UK contract of employment with a UK company covered by this policy.
What benefits are available for a registered Group Life scheme?
Our Group Life product offers a lump sum on death in service, which can be a multiple of salary or a fixed sum. Additionally there can be a dependant’s pension on death in service or even a child’s pension. Quotes can be provided for different scenarios upon request.
What about a non-registered excepted scheme?
Excepted Group Life schemes are currently outside the registered pension scheme tax rules, and allow payments to be made in excess of the Lifetime Allowance. We can offer these whereby only lump sums on death, sharing the same calculation method, may be provided. These lump sums do not count towards the Lifetime Allowance. Excepted schemes can run alongside a registered scheme (sharing the same unit rate, event limit and free cover limit) or they can be standalone. They are particularly useful for employees who have fixed or enhanced protection and would otherwise be unable to join a registered group life scheme.
How are the premiums and benefits taxed?
Contributions into a registered or an excepted scheme are, in most cases, to be treated as a normal business expense. For a registered scheme, lump sums payable on death are normally tax-free unless a member is a particularly high earner or has significant registered benefits elsewhere that take them over the Lifetime Allowance. For excepted schemes, lump sums are usually tax-free.
Our Group Life policies, whether registered or excepted, are written under trust and are not subject to income tax or inheritance tax under current legislation. All pensions are taxable under PAYE and death-in-service pensions do not count towards the Lifetime Allowance.
Tax laws and HM Revenue and Customs practice may change in the future. Tax treatment will depend on a company’s or individual’s circumstances.
Do we need to collect medical evidence from our employees?
If your employees need to be medically underwritten, we’ll either use a medical declaration form or ask them to take part in a Tele-interview. We may need more evidence, but employees are usually covered for a period of 90 days (up to a maximum of £1million, above the schemes free cover limit or member’s previously underwritten benefit, if higher), while medical underwriting is being completed, subject to any pre-existing conditions.
Can cover carry on whilst an employee is absent from work?
If one of your employees is off work due to illness or injury, cover can continue to the policy’s cease age as long as premiums continue and a contract of employment is maintained. If absence is for any other reason, cover may continue up to a maximum of 36 months.
When will an employee’s cover stop?
Cover normally stops for your employees if they leave service, leave the scheme, retire or die. Your company can cancel the policy at any time and we may cancel our cover if premiums fall into arrears.
What happens when a scheme member dies?
We may need to see the original death certificate, marriage or civil partner certificate and the employee's birth certificate. A claim form will then need to be completed and signed by either the scheme trustees or authorised signatories. Alternatively, you can elect to use our online claim service that can often mean no original certificates are usually required.
What’s needed to set the scheme up?
To give you a quotation, we’ll need the following details about your employees:
- Work location
- Country of residence
- Proposed level of cover
To help with the administration, we will provide an electronic template for these details. We’ll also need to know about any long-term absenteeism, previous underwriting decisions and claims history. Then you’ll need to complete an application form and membership schedule on behalf of your company. For new schemes we can provide a combined trust deed and set of rules and your scheme’s administrator will need to register with HM Revenue & Customs. For existing schemes, you can use an existing Trust, rules and registration. We will need to know your existing registration number.
Can I transfer a scheme from another provider?
Yes. Providing there has been no break in cover, we can usually switch over automatically and your employees can be given the same levels of benefit as they had previously.