Group Life Assurance (Death in Service): A Simple Guide for Employers

Group life assurance — often called “death in service” — pays a tax-free lump sum to an employee’s family if they die while working for you. It’s one of the most appreciated benefits a business can offer, and one of the most cost-effective, yet many smaller employers assume it’s out of reach. It usually isn’t.

How much cover is normal?

Benefits are typically set as a multiple of salary — commonly two, three or four times — paid as a tax-free lump sum to the employee’s chosen beneficiaries. You choose the multiple that suits your business and budget, and it applies across the scheme.

Why offer it?

• Recruitment and retention — it’s a benefit candidates notice, and it costs far less than a pay rise of equivalent value.
• Peace of mind — your people know their families are protected.
• Duty of care — it signals that you look after your team, not just while they’re well but if the worst happens.

How is it taxed?

For most registered schemes, premiums are generally treated as an allowable business expense, and the benefit isn’t usually a taxable P11D benefit for employees — a rare win-win. (Tax treatment depends on your circumstances and scheme type, so it’s worth confirming as part of setting it up.)

Setting it up

Schemes can cover teams of almost any size, and larger schemes often come with “medical history disregarded”, meaning employees don’t need individual medical underwriting. ComparePMI compares the market for you, and the FCA-authorised firm we introduce you to handles the setup and the annual renewal.

Few benefits buy as much goodwill per pound as death in service — which is why it’s so often the first one employers add.

ComparePMI compares group life assurance across a wide panel of insurers. If you decide to go ahead, we introduce you to an FCA-authorised firm who advises on, arranges and manages the scheme. Free and no obligation. Head to our business page or ask for a comparison.