{"id":740,"date":"2020-01-03T00:00:00","date_gmt":"2020-01-03T00:00:00","guid":{"rendered":"https:\/\/srcadvisory.com\/why-life-insurance-is-a-top-benefit-for-employees\/"},"modified":"2020-04-14T11:21:31","modified_gmt":"2020-04-14T11:21:31","slug":"why-life-insurance-is-a-top-benefit-for-employees","status":"publish","type":"post","link":"https:\/\/srcadvisory.com\/why-life-insurance-is-a-top-benefit-for-employees\/","title":{"rendered":"WHY LIFE INSURANCE IS A TOP BENEFIT FOR EMPLOYEES"},"content":{"rendered":"<\/p>\n
\n

WHY LIFE INSURANCE IS A TOP BENEFIT FOR EMPLOYEES<\/strong><\/p>\n

Benjamin Franklin famously stated back in 1789 that in this world nothing can be said to be certain, except death and taxes. \u00a0So what could be more fitting than to look at the tax implications of employer provided life insurance?<\/p>\n

Group Life Insurance \u2013 also known as Death in Service Insurance \u2013 is a popular employee benefit and often one of the first to be introduced by an employer as part of a benefits package. It is a fairly simple tax efficient benefit which offers employees and their loved ones peace of mind by providing a tax free cash lump sum should they pass away. \u00a0Normally the benefit ceases when the employee leaves the company or retires, so there is no post-employment cost.<\/p>\n

Tax advantage for the employer<\/strong><\/p>\n

With Group Life Insurance the employer pays the Insurer directly for the employees\u2019 \u00a0life cover. These premiums are normally an allowable cost for corporation tax and are not subject to employers National Insurance (NI) contributions.<\/p>\n

Income tax advantage for employees<\/strong><\/p>\n

For employees, the good news is that Group Life Insurance is not a taxable benefit in kind (P11d Benefit) \u2013 which means there is no income tax or employee NI to pay on the cover provided. \u00a0Under S307 ITEPA 2003, as long as the employer arranges the life insurance and pays the insurance provider directly, \u00a0the provision of life insurance is not a taxable benefit on the employee.\u00a0<\/p>\n

If a policy is arranged by the employee though, with the company then picking up the bill by either reimbursing the employee or paying the insurer directly, then there is a benefit (not an exempt one) as the company are paying for a personal liability. This benefit will be subject to both income tax and employee\/employer NI.<\/p>\n

Inheritance tax for employees<\/strong><\/p>\n

Nearly all Group Life Insurance policies are written into trust, which means the payout falls outside of the deceased\u2019s estate for inheritance tax (IHT) purposes. As a result, the beneficiaries won\u2019t have to pay any IHT \u00a0on Death in Service payouts.<\/p>\n

The non tax advantages<\/strong><\/p>\n

\u2022\u00a0\u00a0 \u00a0It is cheap.<\/strong> The average cost of a \u00a3100,000 benefit is only \u00a3100 a year per employee. So for a small company with 5 staff, the insurance may only cost \u00a3500-\u00a31,000 a \u00a0\u00a0 \u00a0year. The per employee cost is typically much lower than employees would pay if they bought it directly, so they value it higher than the actual cost to the employer.
\n\u2022\u00a0\u00a0 \u00a0It is a natural complement to pension saving, and the ideal starter employee benefit.<\/strong> With all companies now required to set up a workplace pension, life insurance provides financial security pre-retirement when pension savings are small.
\n\u2022\u00a0\u00a0 \u00a0Additional support services, such as bereavement counselling are often available.<\/strong> Providing emotional support in addition to the core insurance, these services provide an important source of support, free of charge.
\n\u2022\u00a0\u00a0 \u00a0Employees do not need to answer any medical questions<\/strong>. As the insurance covers all employees in the organisation, or within a clearly defined group or management grade, in most cases individual employees do not need to complete medical questions.
\n\u2022\u00a0\u00a0 \u00a0It is simple to administer.<\/strong> Once set up, the employer only needs to provide routine membership data to the insurer a few times a year at most. With many insurers, policies are administered online for additional convenience.<\/p>\n

We would be delighted to advise you on\u00a0any tax and accounting aspects of the provision of group life insurance products. Therefore, please do not hesitate to get in touch today on 01273 326 556.
\n\u00a0<\/p>\n<\/div>\n

\n

SRC-Time Ltd
\n2nd Floor
\nStanford Gate
\nSouth Road
\nBrighton
\nBN1 6SB<\/span><\/p>\n

T: +44 (0) 1273 326 556<\/a>
\nF: +44 (0) 1273 733 827
\nE: info@src-time.co.uk<\/a><\/span><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

WHY LIFE INSURANCE IS A TOP BENEFIT FOR EMPLOYEES Benjamin Franklin famously stated back in 1789 that in this world nothing can be said to be certain, except death and taxes. \u00a0So what could be more fitting than to look at the tax implications of employer provided life insurance? Group Life Insurance \u2013 also known […]<\/p>\n","protected":false},"author":4,"featured_media":741,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[14],"tags":[18],"acf":[],"_links":{"self":[{"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/posts\/740"}],"collection":[{"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/comments?post=740"}],"version-history":[{"count":0,"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/posts\/740\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/media\/741"}],"wp:attachment":[{"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/media?parent=740"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/categories?post=740"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/srcadvisory.com\/wp-json\/wp\/v2\/tags?post=740"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}