Life Insurance.
Providing Financial Security
for Your Employee's
Loved-Ones.
Life Insurance provides financial support to an employee’s family or beneficiaries in the event of their premature death. This benefit ensures that loved ones are cared for and helps to cover costs such as mortgages, living expenses, or education. Life Insurance has become a key component of most employee benefits packages, and those that don’t offer some level of life cover are now viewed as the exception. Simply put, this is a must!
Types of Life Insurance Schemes.
Registered vs. Excepted Life Cover
Life Cover is typically offered under two different legal and tax structures: ‘Registered’ and ‘Excepted’.
This is the most common type of group life insurance arrangement. It’s registered with HMRC, meaning it falls under pension legislation. This type of policy benefits from tax advantages, such as corporation tax relief for the employer and employee income tax exemption (it is not a P11d benefit). However, payouts are subject to pension lifetime allowance limits, which may impact those with substantial pension savings.
This type of cover falls under trust rules and isn’t registered with HMRC. It has traditionally been designed for employees whose benefits might exceed the pension lifetime allowance and self-employed equity partners or LLP members who may want to take out Insurance for themselves that is separate from their wider staff. While this type of cover lacks registered schemes’ absolute tax privileges, it allows employers to provide high levels of cover without affecting employees’ pension limits.
Both options offer flexibility, allowing businesses to tailor coverage to suit their workforce’s needs.
Core Levels of Cover.
Life Insurance is typically built around a core cover level linked to an employee’s salary. The most common options are salary multiples, such as 2x, 3x or 4x annual earnings.
For example, an employee earning a £50,000 annual wage might have a core level of cover providing a payout of £150,000 (3 times).
Alternatively, employers may offer a fixed amount of cover, say £200,000, which applies universally to all employees regardless of salary. This is more typical for those employees who do not have a known basic salary which is easy to define.
Using our Zhoosh platform, Life Insurance becomes even more flexible. Employers are not required to offer a core level of cover—employees can choose their level of protection based on their individual needs. For those who do receive a core level of cover, our Flex Life scheme allows employees to purchase additional coverage, often up to £250,000, on top of their core benefit. This flexibility empowers employees to tailor their coverage to suit personal circumstances, such as family size, financial commitments and future planning.
Life Insurance is an affordable and highly impactful benefit. Knowing that loved ones will be financially secure in a worst-case scenario provides real peace of mind to your employees. Through Zhoosh’s flexible benefits platform, businesses can offer a tailored package as a core benefit or an employee-elected option.