How a group life scheme works
You choose who is eligible, for example all permanent staff after a probation period, and a level of benefit such as a set multiple of salary. The insurer prices the scheme on the whole group, so you pay one premium for everyone, usually reviewed each year as people join and leave.
If a member dies while employed, the trustees of the scheme receive the payout and decide who should get it, guided by an expression of wishes form the employee completed. Because the trust holds the money, it can reach the family without waiting for probate.
Why employers offer death in service
Group life is one of the most valued benefits an employer can give, partly because many staff have no personal life cover at all. It helps you recruit and keep good people, and it shows them you have thought about their families.
Most insurers set a free cover limit. Employees below it join without medical questions, which helps staff who might struggle to buy cover on their own. People with very high salaries may need to give health details for the part of their benefit above that limit.
- Simple to explain in a job offer or staff handbook
- Covers new starters automatically once they meet the rules
- Can sit alongside group income protection and critical illness cover
- Leaves directors free to add relevant life cover if they wish
Registered and excepted schemes
Group life schemes are set up either as registered schemes under pension rules or as excepted schemes outside them. The choice affects how larger payouts sit alongside an employee's pension savings and how the trust is treated for inheritance tax.
Smaller employers often find an excepted scheme simpler, while larger ones may use a registered scheme. The detail matters most for senior staff with large pension pots. Your accountant or pension adviser can tell you which suits your workforce, and we can explain how each insurer sets them up.
Running the scheme year to year
Most group life policies run on an annual cycle. At renewal you send the insurer an updated list of members and salaries, and the premium is adjusted for joiners, leavers and pay rises. Some insurers take a provisional premium at the start of the year and settle the difference at the end.
Encourage staff to keep their expression of wishes forms current. Getting married, separating or having a baby can all change who they would want to receive the money. The trustees are not bound by the form, but it gives them clear guidance when they have to decide.
How Hi Tomorrow helps employers set up group life
We need a staff list with ages, salaries and job types, without names. From there we suggest eligibility rules and a benefit level, and compare quotes from the insurers on our panel. We explain each insurer's free cover limit and any differences in how they handle part time staff or people working abroad.
We help you set up the trust, prepare member communications and complete the expression of wishes process. When a member dies, we support the trustees and the family through the claim. Each renewal, we check the scheme still fits your workforce.