Group risk insurance for your team and their families
Group risk is the name for the three employer-paid protection benefits that look after staff when life goes wrong: group life insurance, group income protection and group critical illness cover. We help employers across Northamptonshire, Bedfordshire and the UK compare the market and build a group risk package that fits the budget.
What is group risk?
Group risk is a type of insurance an employer buys for its workforce under one policy, rather than each person buying their own. Because the insurer covers a group rather than an individual, the risk is pooled, pricing is based on the whole workforce and most employees are covered without filling in medical questions. That is where the name comes from.
Group risk benefits sit alongside a pension and private medical insurance as part of an employee benefit package. They provide financial protection for employees and their families if someone dies, is off work long term through illness or injury, or is diagnosed with a serious condition. For employers, they are a practical way to show staff they are valued, support wellbeing and recruit and keep good people.
What does group risk cover mean?
When people talk about group risk cover, they mean the three core products. Many employers start with one and add the others as the business grows.
Group life insurance (death in service)
Group life assurance, often called death in service, pays a tax-free lump sum to an employee's family if they die while employed, commonly a multiple of salary such as two, three or four times. It is the most widely offered group risk benefit in the UK and usually the least expensive.
Group income protection
Group income protection pays a proportion of an employee's salary, typically 50 to 75 percent, if they cannot work because of long-term illness or injury. Payments start after a deferred period, often 13 or 26 weeks, and can continue for a set term or until retirement. It also gives access to early intervention and rehabilitation to help people back to work.
Group critical illness cover
Group critical illness cover pays a lump sum if an employee is diagnosed with a specified serious condition, such as certain cancers, heart attack or stroke. The money is paid to the employee to use however they need.
Why should employers offer group risk benefits?
Group risk insurance protects the employer as well as the employee. The main reasons businesses put it in place are:
- Recruitment and retention. A strong benefits package helps you compete for talent without simply raising salaries.
- Wellbeing support. Most group risk policies include an employee assistance programme, virtual GP, counselling, second medical opinions and mental health support at no extra cost.
- Managing absence. Income protection insurers provide vocational rehabilitation that helps people back to work sooner, reducing the cost of long-term sickness to the business.
- Cost efficiency. Group cover is usually far cheaper per head than individual life insurance, and underwriting is simpler.
- Duty of care. It gives staff and their families real financial protection at the hardest moments.
See what group risk would cost your business
Get a free comparisonHow much does group risk insurance cost?
The cost depends on the size of the workforce, ages, salaries, occupations, the level of cover and claims history. As a very rough guide, group life cover at four times salary often costs well under one percent of the payroll it covers, while group income protection is typically higher because it pays for longer. Group critical illness sits in between.
Small employers can buy group risk cover too. Some insurers will cover businesses with as few as two or three employees. Every figure here is illustrative only, as your quote depends on your staff and the insurer.
How is group risk taxed?
The tax treatment is one of the reasons group risk works so well for employers, although the rules differ by product.
Group life insurance
Set up under a registered or excepted scheme, premiums are normally an allowable business expense and not a P11D benefit for the employee. The lump sum is usually paid through a discretionary trust, so it normally falls outside the employee's estate.
Group income protection
Premiums are normally an allowable expense and not a benefit in kind. Benefits are paid to the employer and passed to the employee through payroll, where they are taxed as income.
Group critical illness
Premiums are usually treated as a benefit in kind, so employees pay tax on the value. The lump sum itself is normally paid tax-free.
Your accountant should confirm the position for your business.
What is the free cover limit?
Group risk policies have a free cover limit, which is the level of benefit an insurer will provide to each employee without asking medical questions. Anyone whose cover is above that limit, usually a higher earner, may need to complete a short health questionnaire for the excess. For most employees, cover starts on the day they join the scheme with no medical underwriting, which is a real advantage over personal cover for anyone with health conditions.
What are the four types of risk in insurance?
Insurers usually group risk into four types: pure risk, where there is only a chance of loss such as death or illness; speculative risk, where there is a chance of loss or gain, such as investing; fundamental risk, which affects large parts of society at once; and particular risk, which affects individuals or single businesses. Group risk products insure pure, particular risks such as an employee's death or long-term absence, which is why they can be priced and pooled across a workforce.
How do you set up group risk cover?
- Decide who is eligible, usually all employees or a defined category, and what level of cover you want to offer.
- Gather anonymised staff data: dates of birth, salaries, gender and occupations.
- A group risk adviser compares insurers such as Aviva, Legal & General, Canada Life, Unum, MetLife, Zurich and AIG on price, benefits and support services.
- Choose the insurer, set up the trust for group life, and communicate the benefits to your team.
- Review the scheme every year at renewal as the workforce changes.
Individual policies
Each employee applies, answers medical questions and pays their own premium. Cover varies from person to person.
Group risk scheme
One policy, one premium paid by the employer, most staff covered automatically, wellbeing services included.
Group risk questions, answered
Is group risk the same as employee benefits?
Group risk is one part of employee benefits. The wider package can also include pensions, private medical insurance and health cash plans.
Can a small business offer group risk benefits?
Yes. Many insurers cover small employers, and group life is often the easiest place to start.
Do employees need a medical?
Usually not. Most employees are covered automatically up to the free cover limit.
Build your group risk package
We are an employee benefits broker that compares the whole group risk market for you. Book a free call and we will show you the options for your team.
Book a free group risk reviewThis page is general information, not a personal recommendation.