Group life insurance

Provide financial security to your employees with group life insurance.

What is group life insurance?

Group life insurance is a type of death-in-service benefit provided to employees. The company pays for the policy, however, if the employee dies or is diagnosed with a terminal illness, the benefit (lump sum payment) goes to the deceased's loved ones.

Group life insurance - sometimes called business life insurance, is typically part of a broader employee benefits package.

Why you might need business life insurance

Life insurance reassures employees who worry about how their family members would cope should the worst happen.

Providing group life insurance is a great way to show your employees how much you value them, which helps retain the best talent and fosters a positive working culture.

Unlike relevant life insurance, which is better for company directors and small businesses, group policies are specifically for companies with a minimum of 5 people.

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How does group life insurance work?

Here's how you would typically buy and use a group life insurance policy:



Speak to us and compare the UK's leading providers, considering how much cover you need and whom you'd like to include.


Pay your insurer monthly or annual premium and tell your staff they're covered.


In the event of an employee's death, call your insurer to make a claim.


Your insurer sends a lump sum payment to the employee's beneficiaries.

Useful to know

There are many considerations and terms to think of when setting up a group life policy, but two, in particular, are good to point out.

  • Free cover limit

    The free cover limit is the maximum amount of coverage you can purchase for an employee without them having to submit any medical information. This is useful to know when you have employees with pre-existing medical conditions as it's effectively the minimum amount they will be covered for, regardless of previous health concerns.
  • Master trust

    Master trust is another term you may notice when shopping for business life insurance.A master trust is an entity set up to help employers administrate their group life policy and be more tax efficient. Many insurers offer master trust solutions, so you don't have to set up or run the trust yourself. Some even come at no extra cost.
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What our customers say

Benefits of group life insurance

When companies provide group life insurance, it benefits the employee, their loved ones, and the company.

Employee benefits

  • Financial support - An employee's loved ones can use the payout to meet financial commitments (e.g. mortgage, bills) in the event of the employee's death.
  • Peace of mind - Life cover gives reassurance to your people that their families will be secure if they unexpectedly pass away.
  • Medical costs - Employees who contract a terminal illness can use their payment to meet their care costs and cover lost income.
  • Tax-free lump sum - Group life insurance payments are not typically liable for inheritance tax.

Employer benefits

  • Support employees - When you offer employee benefits like business life insurance, it shows how much you value them, boosting employee retention.
  • Boost employer brand - Offering benefits such as life insurance shows the world you're a good employer. It helps attract top-quality talent to your business.
  • Raise investment - Possessing business life insurance makes your organisation more attractive to investors.
  • Tax friendly - In many cases, business life insurance premiums are considered a business expense.

What does group life insurance cover?

Group life insurance policies are typically set up to offer cover to a multiple of an employee's annual salary. If the employee becomes terminally unwell or they pass away, the benefit will be paid to their nominated beneficiary.

Some employers elect to extend their group schemes to employees' families to provide more protection to them.

Additional cover options

Group life insurers offer a range of additional options that can be added to your company's policy:

  • Bereavement counselling - employees' loved ones can access services to help them cope with their loss
  • Well-being services - Current employees can access mental health support, including 24/7 helplines, resources and guidance.
  • Rewards - Some insurers offer rewards for life insurance holders, such as gym membership and discounted products

What's typically excluded?

Most of the time, your group life insurance policy will pay out promptly with minimal stress. However, not all causes of death will be covered by the policy, and some other exclusions may apply.

Exclusions may include:

  • Pre-existing conditions
  • Suicide and self-harm
  • Self-inflicted injuries
  • Drug or alcohol misuse
  • Criminal activity

In all cases, check the terms and conditions of your policy or speak with us.

Talk to our expert advisers today to find out more about what else you can offer your valued staff.

How much cover do I need?

Your level of cover depends entirely on you and the needs of your business.

Typically businesses will provide cover for a multiple of their employee's annual salary, between two and eight being the most common. However, it's also possible to specify a flat amount.

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Group life insurance and tax

Group life insurance is purchased via the business and is usually an allowable business expense, meaning it's tax deductible. In addition, group life insurance schemes aren't traditionally seen as a P11D Benefit in Kind by HMRC, so your employees won't need to pay any additional National Insurance or tax on their income.

Finally, as long as a trust is set up at the same time as the plan's inception, the benefit relatives receive won't usually be subject to inheritance tax.

I was very pleased the way Matt understood what my needs are and received a very swift reply to what was the best value on the market. It is a pleasure to speak to him on the phone despite my very busy schedule he always manged to call the times when I was able to speak to him.
Nicole D

Leading providers of group life insurance

Four of the UK's major insurance companies offer group life cover so you can deliver more benefits for your employees. Let's look at each of them in turn:

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Aviva logo


Aviva provides valuable financial support to loved ones left behind when an employee dies while working at your company. It prides itself in prompt payment, paying 100% of group life claims within a week or less, so it's one less thing to worry about at an already stressful time.

It also offers a great range of add-ons, including:

  • Bereavement counselling for the deceased employee's family
  • Master Trust support for your business
  • Mental health guidance and well-being resource library for your employees
L&G Logo

Legal & General

Legal & General provides simple policies designed to provide vital financial help for your employees' loved ones if your employee dies while covered by the policy. It will pay out a tax-free lump sum or taxable dependent's pension. Depending on your policy type, you could qualify for tax relief on premiums.

Extras include:

  • Access to an employee assistance programme (EAP) from an award-winning provider
  • A telephone support line for the deceased employee's immediate family
  • A simple and fast claims system typically paid out within five days
Vitality logo


Vitality offers award-winning business life insurance rated 5-star by Defaqto. Being Vitality, there are all kinds of rewards for making healthy lifestyle choices, so your employees can enjoy a healthy life with peace of mind knowing they're covered should the worst happen.

Features include:

  • Digital assistance for employees, including access to a virtual GP
  • Rewards to nudge employees toward living healthier lives
  • Behavioural insight to help employers formulate the right health strategies for their company

We keep things simple with straightforward, honest advice.

Insurance can be complicated at times, so our priority is to keep things simple and give you the facts you need to make a decision. We don’t rush or push clients in a given direction - it’s vital you come away feeling confident in your choice.

Kingsley Agbo, Senior Broker
Kingsley Agbo

Business life insurance FAQs