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Group risk benefits are a suite of products designed to support employers in meeting their legal obligations to their workforce while reinforcing the values and culture of the organisation.
Group risk policies generally focus on life assurance, income protection and critical illness.
The policyholder is generally the employer who is responsible for paying the premiums and making claims on behalf of the employees.
Employers may choose to offer certain benefits in their employment contracts, such as occupational sick pay, the risk of which they can transfer via an insurance policy. Should the employee need to exercise their right to occupational sick pay, for example, under their employment contract, the employer would then claim under their policy.
Group risk benefits policies provide a high-value, low-cost option for employers to support their employees and attract talent.
Group risk benefits typically fall into three categories:
The most popular group risk benefit, group life assurance provides a payout should an employee die in service, either as a lump sum or taxable pension to the nominated beneficiary. Premiums can be offset against corporation tax and are not seen as a benefit in kind, which means they will not create an income tax liability for the employee.
Group income protection supports the employer in their obligation to provide sick pay to employees in the event of their illness or injury. The benefit level is designed to provide a reasonable income for the employee while retaining a financial incentive to return to work. Insurers may provide access to additional services to support this aim, such as counselling or physiotherapy.
The employer will typically be able to claim premium payments against corporation tax liability and is not classed as a benefit in kind for employees.
Group critical illness is cover taken out by an employer to provide a tax-free lump sum payment to an employee who has been diagnosed with a defined severe condition or illness.
The employer will typically be able to claim premium payments against corporation tax liability; however, they will pay Class 1A National Insurance contributions on the premiums, and they are treated as a benefit in kind for the employee.
Group risk benefits can cost as little as £100 annually per employee for a £100,000 benefit.
If the employee were to buy the cover themselves, they would typically be paying much more and as such place a higher value on the employer-provided cover.
Our team of experienced advisors can help you to get an insurance policy that is perfect for you. By working with an insurance expert, you ensure that your cover is precisely tailored to your needs while remaining cost-effective. Get in touch today to get started!
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