Group Life Assurance

What is Group Life Assurance?

Group Life Assurance provides a lump sum if an employee dies whilst employed by you and can be designed to suit your company structure.

This cover can be written as either a Registered scheme or an Excepted scheme, or as two policies that are linked with the same unit rate depending on your requirements.

What is a Registered scheme?

  • A Registered Scheme is set up under Trust, which Employers can register with HMRC.  Registered Schemes are classed as pension schemes and in view of this any lump sum paid to beneficiaries under all such schemes will be tested against the Lifetime Allowance (£1m for the tax year 2017/18)
  • This type of scheme provides a lump sum usually equal to a multiple of the employee’s earnings (as defined by the Employer) or as a fixed amount.
  • The benefit is paid to the Trustees, normally the employer, who have sole discretion as to whom the lump sum benefits are payable, taking into consideration the employee’s wishes, if an indication has been provided.
  • Due to Registered Group Life Schemes being classed as pension schemes there may be implications in respect of the Lifetime Allowance being exceeded and benefits being taxed.
  • One solution is to implement an Excepted Scheme as these types of schemes are not classed as pension schemes, therefore benefits paid out under such schemes do not count towards the Lifetime Allowance.

What is an Excepted scheme?

  • An Excepted scheme is also set up under Trust, which Employers can register with HMRC.  This provides beneficiaries with financial protection of a tax-free lump sum without the Lifetime Allowance constraint.
  • This type of scheme provides a lump sum usually equal to a multiple of the employee’s earnings (as defined by the Employer) or as a fixed amount.
  • The benefit is paid to the Trustees, normally the employer, who have sole discretion as to whom the lump sum benefits are payable, taking into consideration the employee’s wishes, if an indication has been provided.
  • There is however the potential for a tax charge at the on 10 years following the set-up if the Trust, should there be any benefits within the Trust which have not been settled.  We can work with you to mitigate this tax risk.
  • It is possible to run a Registered scheme (for most employees) alongside an Excepted scheme (for higher paid individuals, or those with a Lifetime Allowance issue).

Goddard Perry will work with you, providing guidance and support to ensure the benefits you provide meet with your company and employee needs.  Our service includes:

Planning & Consulting

  • Initial meeting to understand your business and employee needs and create a project plan.
  • Analysis of any existing arrangements, and if required a full market review to source and recommend a suitable arrangement.
  • Consultation and advice on the key points to consider, your scheme design and identification of any other relevant issues.
  • Implementation and Employee Communications
  • Full assistance with the implementation of the arrangement.
  • Provision of an employee communication strategy to ensure they are made aware of the cover to be provided.
  • Assistance with completion of the insurers application documents, ensuring that cover is in place and documented correctly.

Ongoing Services

  • Managing your scheme renewals each year.
  • At each rate expiry (usually every 2 years) we will also conduct a market review to ensure your provider remains suitable. A clear and concise report will be provided making a recommendation to enable you to make an informed decision for the benefit of the company and employees.
  • Annual review of staff data to ensure all employees remain covered and eligible and to identify whether a mid-term review is required.
  • Assistance with any claims.
  • Assistance with underwriting.
  • Keep you informed of Legislative changes which may affect the benefits you provide.
  • Inform you of any valuable additional benefits provided by the insurer you have chosen.
  • We can also provide a market review which falls outside of the rate guarantee period.

 

If you require more information or assistance regarding possible Group Life Assurance requirements please email us

Goddard Perry Consulting

THROUGH PREPARATION COMES STRENGTH