Group life assurance for employers

The first decision is what the scheme promises to provide. Establish who is covered, the benefit amount and the salary definition used to calculate it. Record when a person becomes eligible and when cover ends.

The phrase death in service describes the connection to employment. Do not tell employees that a death must happen at work. The policy's insured event and membership terms govern the claim. [S09]

For a salary-based benefit, ask the broker to show the effect of a pay rise, variable pay and a move between employee categories. A fixed benefit requires a different review: decide when the amount should next be reconsidered. Neither approach should be left as an unexplained multiple in a staff handbook.

The insurance provides the insured payment when its terms are met. The trust provides the framework for administering and distributing that benefit. Canada Life's guidance distinguishes registered trusts, non-registered excepted trusts and arrangements with appointed professional trustees. [S10]

Ask who will establish the trust, who the trustees and administrator will be, and who is responsible for keeping the documents current. Buying insurance does not answer those administration questions.

Keep the employer's scheme documents where an authorised replacement can find them. A benefits contact leaving the business should not leave the next person without the trust records.

Registered and excepted group life arrangements have different tax treatment. The appropriate structure depends on the scheme and circumstances. Obtain advice on the trust and tax position rather than choosing from the names alone. [S10]

Ask the adviser to explain the proposed structure in writing, including who maintains it, what review is required and what happens when employees or participating employers change. If a master trust is proposed, ask which responsibilities the provider's trustees take and which remain with the employer.

This guide does not select a trust structure or calculate a beneficiary's tax position. Do not put an unconditional tax-free promise into employee communications. Confirm the wording for the actual arrangement with the adviser.

An expression-of-wish form tells the trustees who the employee would like them to consider. In a discretionary arrangement, it informs the trustees' decision; it should not be described as a guaranteed instruction to pay a named person. [S10]

Make completing and updating the form part of the benefit's administration. Explain where it goes and who can access it. Invite employees to reconsider their wishes after a change in personal circumstances, without asking them to disclose those circumstances to a line manager.

Check the process using a blank form: can a new employee find it, understand why it matters and submit it through the correct channel? Confirm that the version available to staff belongs to the current scheme.

Before announcing cover, ask the insurer how membership is established and whether any individual medical underwriting is outstanding. A scheme may offer cover without medical evidence up to a limit, subject to its terms. Ask what happens above that limit and for any person joining outside the normal eligibility rules. [S11]

Require answers for people on extended absence, parental leave, secondment or an overseas assignment. Ask whether an actively-at-work condition applies at entry, on a benefit increase or when moving insurer. The answer belongs in the scheme record, not in an assumption that everyone on payroll has identical cover.

When an employee leaves, tell them the confirmed cover end date. Ask the provider whether any individual continuation option exists; do not promise that the workplace policy goes with them.

Some group life policies include access to support services before any death claim. Unum's published material, for example, describes health support and bereavement services. That is evidence of possible services, not confirmation of entitlement under another employer's policy. [S09]

For your own scheme, list the services actually available, whether family members can use them and the current access instructions. Check whether services are contractual benefits or separately provided support that may change. Explain bereavement support independently of the insurance claim process.

Ask for the renewal comparison against the same benefit basis and membership information. Separate changes in the insured amount or population from changes in the quoted rate. Establish how long the quoted terms remain fixed and which changes can trigger a review.

At the same meeting, reconcile the member list, salary data, outstanding underwriting, trust documents and employee forms. If the insurer changes, confirm the transfer terms and any actions needed for people absent from work. Keep a record of what employees need to be told and when.