Group Life Assurance Cover
Group Life Cover is life assurance provided by a company for its employees (i.e. the premiums are paid by the employer to cover the employees). It provides a lump sum (and, sometimes, a dependent’s pension benefit) on the death of a member of a scheme.
How does Group Life Assurance work?
On the death of a scheme member a lump sum is paid to trustees. The trustees pass this along to the member’s estate. There is a maximum amount that can be paid tax free. If selected, an annual dependent’s pension is also paid and taxed as income. The amount is specified at the outset (e.g. a fixed amount or a multiple of salary) and the premiums are paid by the employer.
This is a way for an employer of providing financial security to the family of an employee in the event of that employee’s death during service. This provides important peace of mind to employees. Legally, the benefit is usually provided via a company’s pension plan.
Our strengths in Group Life Assurance Cover
- We are the market leader with a market share of approx. 50% for life cover (Source: Irish Insurance Federation statistics)
- Annually Irish Life Corporate Business pays out approximately €50m in claims under Group Life Assurance contracts.
- We offer very competitive rates and have done so for over 20 years, reflected in our strong market share.
- To support our position as market leader we employ over 65 staff who are fully dedicated to managing our risk portfolio.
Source: Irish Life
Why would an employer set up a Group Life Assurance Cover for their employees?
- An employer can write off the full cost of providing the benefits against corporation tax.
- It is an attractive benefit that the employer can offer current and future employees.
- The underwriting requirements for group life assurance are much less stringent than for individual life assurance cover. A non-medical limit is set based on the size of the group and the levels of cover. Any member whose benefits are below this limit does not need to be medically underwritten, which means that no further medical assessment is required. Irish Life’s non-medical limits are very competitive with a maximum of €1.8m.
- As cover is organised on a group basis, costs are significantly lower than equivalent individual life assurance cover.
- Administration for the employer (and broker) is much more straightforward than purchasing equivalent life assurance cover policies for each individual employee.
What does Irish Life Corporate Business need to provide a quote?
- All we need is a list of the employees’ dates of birth, gender and salaries, along with the level of benefit the employer wants to provide. Some background on the member’s occupation is also useful.
- We do not need the company or employee names.
- We will issue you with a quote confirming the number of members, benefit structure, sum assured, non-medical limit and premium cost of the policy.
How do you set up a Group Life Assurance scheme?
It’s easy – once you are happy with the quote, we send you an Employer Proposal form and an explanatory booklet. If members are over the non-medical limit, we may need individual proposal forms to be completed by these members. You return the completed Employer Proposal form to us together with:
- A full list of the members to be covered
- Their dates of birth
- Salaries and gender
- A letter confirming that Irish Life Corporate Business are to commence life assurance cover on a certain date
- Payment on account
Group Life Assurance scheme set up
In order to establish a group life assurance scheme it must be set up under a trust approved by the Revenue Commissioners. Irish Life Corporate Business will provide standard documentation for you to complete in order to formally establish the scheme under trust. We will submit your documentation to the Revenue Commissioners and the Pensions Authority in order to have it approved and registered. By being established under trust the scheme can qualify for tax relief on premiums as well as allow certain benefits to be paid tax free up to certain limits. Any income from benefits under a group life assurance plan are subject to income tax under the pay as you earn (PAYE) tax system.
We set up the scheme on our records and review our underwriting requirements. We may contact you again at this stage, if there are additional items required in order to complete underwriting.
Once a year we will send you a pre-renewal schedule. This is sent out 6 weeks before the renewal is due and the client must update any changes to the employee details (e.g. people joining or leaving the scheme, salary changes etc). When you send this back to Irish Life Corporate Business the renewal is completed. For more details about the steps and timeframes of the renewal process see our Group Risk Guide.
The premium rate is guaranteed for a certain period, usually three years. After this time, the rate is reviewed and a new rate, based on membership at that time and the scheme’s claims experience, is set. The rate may change between review dates if there are significant changes in membership.
Please see our Group Risk Guide for more information, it explains the key processes involved in the lifecycle of our group risk products, from the new scheme installation process through to the claim payment process and is designed to answer some of the questions we are often asked by brokers and clients along the way.