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Group life cover

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What is Group Life Cover?

Group life cover is a type of term insurance, also known as death in service benefit, which an employer may offer to their staff. It is set up by your employer to cover you while you are employed within their organisation.


Group Life Cover

How does group life cover work?

If you die, death in service benefit pays out a lump sum to your family or next of kin. The lump sum is usually based on a multiple of your salary, for example two, three, or four times your salary. This benefit is tax-free provided it is not more than your available lifetime tax-free allowance which was £1.8 million in 2012-13.

For your family to receive death in service benefit, you must be employed with your organisation at the time of your death. This type of life cover usually runs until your normal retirement age. If you take time out from your career or leave the company for any reason you will no longer be covered.

Group life cover is purchased by your employer

Your employer pays the premium and agrees the level of cover with the insurance company. This is different to other individual term insurance policies where you pay the premium and decide the level of your cover.

  • death in benefit schemes can be bought for each employee individually but most employers take out group life cover for all of their employees
  • group life schemes can be set up on a standalone basis or linked to your company pension

Next steps

  • talk to your employer or your HR representative to find out what your group life scheme covers
  • talk to a financial adviser or insurance broker through unbiased.co.uk or the British Insurance Brokers' Association (BIBA) website to find out what kind of individual life cover you can get if you are self-employed or your employer does not offer group life cover
  • shop around to find out more on how to buy the best type of life cover for you