Group Life Assurance

The Basics of Group Life Assurance

Companies in the UK have come up and make use of various strategies to attract and retain the best employees available. One of the most popular ways of doing so is by offering group life assurance plans to employees that provide financial support in the form of pensions or retirement accounts. This article will discuss the fundamental principles of group life insurance as well as some of the advantages and disadvantages of taking out this type of policy.

The Fundamentals

The first condition that needs to be satisfied in order to be eligible for group life assurance is that the employee has to be active at work. This means that those on disability or any similar type of leave will have an ineffective policy until he or she returns to work. Second, there�s what�s known as the non-discriminatory insurance schedule. This means that the employees are not given the option to choose the amount of cover or the type of their policy. There is a contract that is agreed upon by the insurance company and the employer which stipulates the details of the policies. This becomes applicable to all employees and the only option they�d have is whether they�d like to join or not.

In terms of paying the premium, it is divided into the employer�s contribution and the employee�s contribution. In most cases the company will pay up to 50 percent of the monthly premium, but there are other UK companies that tend to pay more. If the company pays the entire premium, this is called a non-contributor plan. On the part of the employee, his contribution is deducted from his monthly salary and is combined with the employer�s contribution to be able to pay off the premium.

Advantages

The main advantage of group life insurance is that the employer pays for a considerable part of the monthly premium. Also, insurability is not required and payments on the premium made by the employer are tax deductible. Group life assurance policies also give the employees the option of converting the policy into a private plan and most deals even extend up to 31 days in the case that the employee is terminated by the company. On a more morbid note, there is also no suicide clause for this type of insurance policy.

Disadvantages

One of the downsides of group life insurance is that it may end up being more expensive than taking out a personal life insurance policy. This is especially true for individuals with health problems or those that are older than 50 years old as the premium is known to rise considerably once the insured turns 51.