Group Life Assurance, often described as Death in Service, typically provides a lump-sum benefit following the death of an insured employee.
The basic proposition is straightforward.
That simplicity can, however, mean established arrangements go relatively unexamined for years.
Why an apparently healthy scheme may still deserve a review
A health check undertaken by the Clear Employee Benefits team on an inherited Group Life scheme provides an example.
On the surface, there was little reason for concern. Cover was in place and the premium remained competitive.
However, reviewing the policy alongside the underlying member information highlighted circumstances affecting two senior employees that warranted closer examination.
The structure of their benefits was subsequently changed.
Around 14 months later, one of those employees died unexpectedly and a claim was made under the revised arrangement.
The case demonstrated an important distinction: having insurance in place isn't necessarily the same as knowing the scheme remains appropriately structured for every member.
What should a Group Life review consider?
Areas worth examining can include:
- the basis on which benefits are calculated;
- Free Cover Levels and underwriting requirements;
- the structure of the arrangement;
- employee eligibility;
- Expression of Wish information;
- the definition of salary;
- ceasing ages;
- employees who are absent for extended periods; and
- additional support services provided by the insurer.
Not every review will identify a problem.
Confirming that an existing arrangement remains appropriate is itself a useful outcome.
Don't forget the services surrounding the insurance
Depending on the insurer and policy, Group Life arrangements can include services beyond the core insured benefit.
These may include bereavement and probate support, employee assistance services, mental health resources and other wellbeing services.
Their value depends partly on employees knowing they exist.
Communication should therefore form part of an effective Group Life strategy rather than ending once the policy has been arranged.
When should employers review Group Life Assurance?
Renewal provides an obvious opportunity, but a review may also be worthwhile following:
- significant workforce growth;
- changes to senior remuneration;
- acquisitions or restructuring;
- changes to benefit strategy;
- changes in employee demographics; or
- several years without a detailed scheme review.
Price remains important.
But periodically asking “If somebody claimed tomorrow, are we confident this arrangement would work as expected?” can reveal more than a straightforward premium comparison.
If your Group Life scheme has been in place for several years or your workforce has changed materially, the Clear Employee Benefits team can help review whether it remains fit for purpose.
Contact ebenquiries@thecleargroup.com.
