The advantages of offering a Death in Service benefit to your staff
Providing group life insurance, also known as a death in service benefit, not only gives added value to your employees, there are tangible benefits for your business too.
What is group life insurance?
It is an employee benefit that pays out a lump sum to beneficiaries if that staff member died while working for your company.
Why offer it?
You may be wondering why people would want this benefit? Well, the expense of funerals continues to increase. According to Sunlife, the average cost of dying in 2018 was £9,204. They predict that if prices continue to rise in the same way as they have done, then the average cost of dying could reach over £10,000 in just three years.
This is a significant cost for loved ones to bear. On top of that, the immediate family will now need to meet their household running costs without the income of the person who has died.
MORE TH>N reports that owning a three-bedroom home in the UK costs, on average, almost £20,000 a year. This doesn’t include the additional expense that having children can bring.
The total cost of raising a child over their lifetime could be as much as £102,627 for a single parent/guardian.
Life insurance can give employees peace of mind that the people they care for will be looked after if anything happens.
At face value, all the advantage of group life insurance is with the employee, with little return for the employer. But there are tangible benefits for the business.
1. Attracting and retaining talent
Group life insurance is an attractive employee benefit for all the reasons above. If you don’t offer this and your competitors do, then you could lose out on sought after talent.
Providing this benefit for the workforce you already have helps develop a caring culture which breeds loyalty, productivity and promotes a ‘feel-good’ factor. Meaning you are more likely to hold onto the staff you have as they feel valued.
2. It’s simple to understand and administer
Most people don’t need to provide any medical information to be covered by a group life insurance scheme. Also, as it is administered through a trust, the benefit doesn’t form part of the deceased’s estate, so there’s no tax and no need to wait for probate when a claim is made.
In the event of an employee’s death, paying out is usually a simple process, as long as the beneficiary notification form that confirms who should receive the lump sum is kept up-to-date.
3. Additional benefits come with the scheme
Group life insurance can often come with additional services as part of the scheme, providing even better value. For example:
- Access to bereavement counselling for dependants
- Online training module for line managers on dealing with bereavement
- Critical incident support – usually used if the death was an accident at work
This means you can offer even more to your staff, without any additional costs to the company.
Group life insurance is not a one size fits all arrangement. There is a range of schemes available. Meaning that you can find a solution that fits your business and employee needs and also meets your budgetary requirements.
Some schemes will offer high multiples of salary as a payout, while smaller businesses may benefit from more straightforward cover, such as one that pays out a fixed lump sum and is cheaper. For the bereaved beneficiary, even a relatively modest amount of benefit can make a massive difference.
Offering a scheme like this is often less expensive than you might expect.
Want to find out more?
A good employee benefits offering has the potential to help you retain key people and attract new talent to facilitate your business to continue being successful in the future. We can help you find the most appropriate solution for your company. Contact us today for a complimentary consultation and find out how you can create a brighter future for your business as well as your workforce – 01424 777 156 or firstname.lastname@example.org
If you found this information useful, you may also want to check out the following:
- Case Study: How we helped a business reward its staff through employee benefits.
- Would you let your employees pick their own salary?
- What benefits do your staff really want?
MRA specialise in business solutions, and are Life Centred Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells