General FAQs

These are some of the more frequently asked questions we hear about Group Life cover. But because your needs will reflect the individual nature of your business, we’re also happy to answer any other queries you may have. Call us on 0845 300 4452. We’re happy to help.

Would I have to cover all of my employees?

You could choose to cover just one level of employees, Directors for example. Or, you may want to introduce a fixed probationary period for your employees, before they are eligible to receive Group Life cover. You may decide to allow entry to your company’s scheme at schedule points during the year – monthly or annually – depending on length of service with the business. It’s important to understand the implications of the Equality Act 2010, which make it illegal to discriminate against employees, job seekers or trainees on grounds of age.

Does every employee have to be covered at the same level?

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 claim than other staff. Or you could decide to set a fixed amount for some employees, and then base cover on a multiple of salary for others.

Would cover extend to my employees based overseas?

We can consider covering employees who are resident overseas, as long as they have a 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 and free cover limit) or they can be standalone. They can also cater for high earners whose benefits might exceed the Lifetime Allowance, where any benefits above this limit would otherwise be taxed – although tax rules may change in the future.

Are there any tax advantages?

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 (£1.8 million from 6 April 2010). 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, but tax laws may change in the future.

What medical evidence will we need to collect?

If your employees need to be medically underwritten, we’ll either use a medical declaration form or ask them to take part in a Teleinterview. More evidence may be needed, but employees are usually covered for a period of 90 days (up to a maximum of £1million), while medical underwriting is being completed, subject to any pre-existing conditions.

Can cover be maintained while an employee is absent from work?

If one of your employees is off work due to illness or injury, cover can continue to normal retirement 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 need to see the original death certificate, any marriage or civil partner certificate and birth certificate of the employee. A claim form needs to be completed and signed on behalf of the scheme Trustees by an authorised signatory. If payment is not to be made to the Trustees’ account, then we’ll need a completed form of discharge for payment to a third party.

What’s needed to set the scheme up?

To give you a quotation, we’ll need the following details about your employees:

Age
Gender
Occupation
Location
Country of residence
Salary
Proposed level of cover

We can provide an electronic template, which will help reduce the administration involved in collecting these details. We’ll also need to find out about any long-term absenteeism, previous underwriting decisions and claims history. Then you’ll need to complete a Trustee Proposal, Scheme Details 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.

How long do premiums remain the same?

For schemes like yours, covering 250+ lives, we operate a ‘unit-rate’ basis. This means that the rate is normally guaranteed for two years. Premiums (rather than rates) may require adjustment each year to take into account joiners, leavers and changes to levels of benefit.

Can I transfer a scheme from another provider?

Yes. Providing there has been no break in cover, we can usually switch over automatically. Your employees can be given the same levels of benefit as they had previously.

Helping you, to help your employees…

We’re always happy to talk about our range of Group Risk products and explain them in more detail. If you’d like to set up a meeting, or just have a few queries, you’re welcome to call us on 0845 300 4452.

WC00510 06072011