Group Life Insurance

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Group life insurance can be a very cost effective way to purchase life insurance for multiple people.

Whether it is 2, 5 or 10 people looking for cover within a family, friends or employees – it is typically cheaper the more people you cover under one policy. Plus, it can come with a number of added benefits too for your loved ones.

  • Pay a low monthly fee
  • Cheaper for the more people you cover
  • It pays up to 4 times your annual salary if you die*
  • Includes other benefits and discounts

At MediCompare, we have partnered with a number of providers who can offer a tailored and personalised quote for you, your family or the employees of your organisation.

Simply enter your details into our form provided and you will receive a call back from one of our team members as soon as possible.


What Is a Group Life Insurance Scheme?

Group life insurance is a type of insurance policy that provides coverage for a group of people, typically employees of a company or members of an organisation. It usually means that if any employee dies, a payout is made to their beneficiaries as long as certain conditions are met. 

The policy is usually purchased by the employer or organisation and is offered to employees or members as a benefit.

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Who Is Covered by a Group Life Insurance Scheme?

The person who purchases this insurance (usually the employer) can decide which employees will be covered by a group life insurance scheme. These employees are known as “eligible employees”.

The eligible employees can be all employees, or just the active members in the pension scheme, or even just employees of a specific level of seniority. However, if two people are doing the same job, they must have the same level of cover, otherwise this is likely to be termed as discrimination.

When Does a Group Life Insurance Scheme Pay Out?

A group life insurance policy will typically pay out a death benefit to the beneficiary of the deceased employee if this employee dies while the policy is in effect. They do not have to be at work during the moment of death. They only need to be actively employed. 

Some group life insurance policies may also include additional features such as accidental death and dismemberment coverage, which provides for the payment of additional benefits in the event of accidental injury or disability. These additional benefits may be paid out to the beneficiary in the form of a lump sum or as a series of payments over time.

How Is the Amount to Be Paid Out on Death Calculated?

The amount of the death benefit that is paid out under a group life insurance policy is typically based on the policy holder’s salary or wages at the time of death. The death benefit may also be based on other factors such as the policy holder’s age and length of service with the employer. 

The policy may specify a fixed amount of coverage (e.g. £100,000 payable upon death), or it may provide a multiple of the policy holder’s salary (e.g. two year’s wages upon death).  In some cases, the policy holder may be able to choose the amount of coverage they want, within certain limits set by the insurer.

This can be paid out in instalments, or in a lump sum. Lump sums of between £50,000 and £100,000* are relatively common.


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What Exclusions Do Group Life Insurance Policies Have?

Many group life insurance policies have exclusions, which are circumstances or events that are not covered by the policy. Common exclusions in group life insurance policies include:

  • Suicide: Many policies exclude coverage for death by suicide during the first year or two of the policy. However, after this exclusion period has passed, the policy will typically cover death by suicide.
  • Pre-existing medical conditions: Some policies may exclude coverage for death or disability due to a pre-existing medical condition. This means that if your employee knew about a medical issue beforehand, they may not be eligible for group life insurance.
  • High-risk activities: Some policies may exclude coverage for death or disability that results from participating in high-risk activities such as skydiving, bungee jumping, or racing.


How Would Somebody’s Cover End?

There are a few different ways that coverage under a group life insurance policy can end. The most common is termination of employment. When an employee leaves their employer’s business, their inclusion in the policy ends.

Other common reasons include:

  • Termination of the policy: The employer or organisation that purchased the policy may decide to terminate the policy at some point. If this happens, coverage for all employees will end.
  • Nonpayment of premiums: If any required premiums are not paid, the policy may be cancelled by the insurance company.
  • Policy limits: Some group life insurance policies have limits on the amount of coverage available, meaning someone reaches this limit, their coverage will end.
  • Retirement: In some cases, coverage under a group life insurance policy may end when the policy holder retires.
_Group Life Insurance doctor

Would Inheritance Tax Need to Be Paid by the Beneficiary of a Group Life Payout?

Inheritance tax is a tax against the estate of a deceased person being inherited by their beneficiaries. It is not a tax on the beneficiary of an insurance policy. If the beneficiary of a group life insurance policy receives a death benefit, they will not have to pay inheritance tax on the money they receive.

However, it can be worth checking that this death benefit is written into trust, which it should be if it is set up correctly.

Why Do Employers Pay for Group Life Insurance?

Group life insurance is a highly attractive benefit for employees, and offering it can help an employer attract and retain top talent. Businesses who offer benefits such as group life insurance will have an edge against businesses who don’t, when it comes to securing the best employees.

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How Much Will Group Life Insurance Cost My Business?

The cost of group life insurance will vary based on the specific terms of the policy, such as the length of the policy term and any additional features or riders that are included. 

To get an estimate of how much group life insurance might cost for your business, fill in this form and apply for a quote. You may be asked to provide information about your business, your ideal number of eligible employees, and the amount of coverage you are seeking. 

Do Any of the Payouts Affect the Employees’ Pension Planning?

  • Yes, payment of a death benefit from a group life insurance policy might affect an employee’s pension planning in a few different ways.
  • If the employee was participating in a pension plan that was based on their salary or wages, the payment of a death benefit to their beneficiary may impact the calculation of their pension benefits. This will depend on the specific terms of the pension plan and how the death benefit is treated in relation to the employee’s salary or wages.
  • Some pension plans provide survivor benefits to the spouse or other dependents of the employee in the event of the employee’s death. The payment of a death benefit from a group life insurance policy may affect the amount of survivor benefits that are paid out under the pension plan.
  • At the end of the day, this depends on a number of factors, all of which can be addressed when you set up your group life insurance scheme. There are ways to avoid the death benefit being added to the pension pot, for example.

How Do I Set Up a Group Life Insurance Scheme?

Setting up a group life insurance policy can be relatively easy, especially if you are working with a reputable insurance company that has experience with group life insurance. 

The first step in setting up a group life insurance policy is to determine how much coverage you think your company might need.

This will depend on factors such as your budget, the size of your team, and its demographics in terms of age, health, and gender.

Once you have some idea of how much coverage you need, you can compare quotes from different insurance companies to find the policy that best meets your needs.

The goal should be to find the company that can provide you the best coverage at the most reasonable price.

After selecting your insurance provider, you can enrol your employees in the insurance policy. Your employees will likely have to fill in some forms which might ask for relevant medical information. 

Once your employees are enrolled, you will need to pay monthly or quarterly premiums to the insurance company. This will maintain coverage for everyone enrolled under your group life insurance scheme.


Our dedicated team will get in touch with you on the same day and provide you with a quotation.

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