Tax-Free Benefits for Directors and Employees
Group Life Assurance for Small Companies

Life Assurance is a core element of a Company’s  21st century benefits package and enables the employer  to protect the families of their employees should the worst happen.

Group Life Assurance Schemes are flexible in design and mean that employers can tailor the amount of cover for different categories - e.g. directors and employees -  to provide benefits that address both business needs and budget.  The cover can be a Multiple of Salary (up to 20 times earnings) or a Flat Rate sum.  The benefit is payable on death during service with the company.  All causes of death are covered.

From the employer’s standpoint the company can claim the cost of providing this benefit as a business expense. If the death in service Scheme is set up under the vehicle of a Trust, the premiums paid are also not normally taxed as a benefit in kind for Employees. 

A Trust has other advantages;  the Life Assurance Benefit - paid as a lump-sum to the member’s beneficiaries via the Trustees - does not normally form part of the deceased member's estate. The Benefit is therefore free of inheritance tax and can be paid immediately, the beneficiaries do not have to wait for Probate to be granted.

If enough directors and employees are included in the Scheme the insurance provider will set a generous“Free Cover level “.  This is an amount of Benefit  below which no details about the individual’s health & lifestyle are required for an individual member to be covered by the provider.

Overall, this route is a very cost effective approach to obtaining Life Assurance protection compared with individual contracts and provision can, typically, be less than 0.5% of total payroll.  For example a Scheme of 10 members, with a total payroll of £500,000 which provides cover of twice salary can cost £1,300 a year. Scheme membership numbers and benefits are recosted once a year.

If you are interested in getting a quote of costs and benefits to construct a new Group Life Assurance Scheme for your directors and workforce, please contact us here