Find out how to calculate group life insurance from the team at WIS Business Protection and compare providers and costs to make an informed decision.
The topic of group life insurance can be confusing, especially if you’re not in the insurance industry. But it’s important to understand what it is and how it works. The average cost of group life insurance for businesses in the UK is £19.78 per member per month. This is based on data from the Association of British Insurers (ABI).
Group life insurance can be purchased as a stand-alone policy or as part of a group personal pension plan (GPPP). A GPPP has many benefits over stand-alone policies, including:
• Lower premiums as there are fewer administrative costs for providers
• Automatic contributions through payroll so there is no need to chase employees to make payments
• No medical underwriting required
• The ability to borrow money against your policy if you need it
In this blog, we will explore how to calculate group life insurance and what it is.
What is group life insurance?
Group life insurance is a type of life insurance policy that is purchased by a group or association. Group life insurance is usually available at a lower cost to the insured than individual policies. This is because the costs associated with underwriting and administering an individual policy are spread across all members of the group.
In most cases, group life insurance will also provide survivors’ benefits for the family of an employee who dies prematurely. Usually, this will include a lump sum payment as well as monthly payments over a period of time in order to help support their family financially.
How does group life insurance work?
Group life insurance policies are generally offered by larger firms, although small businesses may elect to offer this type of coverage too. The employer pays the premiums on behalf of its employees in exchange for them being covered by the policy in case something happens to them while they’re working for the business. This means that if an employee dies prematurely, their family will receive financial support from their employer’s group life insurance policy.
Why do businesses in the UK need group life insurance?
Group life insurance is an important benefit for many businesses. It can help cover the cost of replacing employees who leave or lose their jobs due to illness or injury. The following are some reasons why businesses need this cover:
• It provides peace of mind for employees and their families in case something happens to them while they’re at work or on the job site.
• It protects businesses from financial loss in the event a workplace accident or occupational illness prevents staff from doing their jobs.
• The peace of mind and financial support provided can help employees recover from injuries faster and get back to work sooner.
• It ensures that there will always be enough people working in an office or factory premises so that operations don’t have to stop because of a lack of manpower. If someone dies unexpectedly, money can be used from their policy to temporarily hire another person to take over their work responsibilities until replacement staff can be found and trained up.
How to calculate group life insurance
The cost of group life insurance depends on several factors:
• The number of people covered by the policy
• The level of coverage
• How long the policy will last
• How much the premium will increase each year (if at all)
The first step in calculating group life insurance costs is to determine how many employees, retirees and family members will be covered by the policy. This will help you determine how much money you need to pay out each month to cover everyone’s premiums.
You’ll also need to decide how long you want your policy to last — typically one year or three years — and what type of coverage you want: term or permanent. Term policies usually have lower premiums but must be renewed every year; permanent policies have higher premiums but stay active until cancelled by the owner.
For more information on how to calculate group life insurance, get in touch with WIS Business Protection today.