Chase Templeton summarises Optimal Protection's Simple Group Life, a death-in-service policy notable for its simplicity.
Simple Group Life.
Optimal Protection, a new business protection provider and a subsidiary of The Original Holloway Friendly Society which provides underwriting.
What is its purpose?
Group life insurance, also known as death in service or group life assurance, is designed to protect the families and dependents of employees. The employer holds the policy which pays out a lump sum – usually tax free – when an insured employee dies. This is the model that Simple Group Life follows but some death in service policies will pay a pension and some a combination of lump sum and pension.
Often incorporated within a wider employee benefits package, death in service insurance is designed to provide reassurance to employees that, should they die whilst on your payroll, then their loved ones will receive a financial cushion.
Group life is not business liability insurance. It is designed to pay out simply when an insured member dies, so the cause of their passing need not be related to their work.
Because it is a “wholesale” policy benefiting from bulk purchasing, death in service insurance is also cheaper per head than buying individual group life policies. Its cost to an employer is therefore likely to be much lower than its perceived value to an employee.
Who’s it suitable for?
Simple Group Life has been created specifically to serve micro and smaller SME businesses. This is a sector of the market which Optimal argues has previously been neglected.
It is designed to address the “economics of the advisory and scheme set up processes” which meant that many smaller businesses did not offer death in service insurance to their employees.
What are the key benefits?
The clue is in the name; the simplicity of this product will appeal to owners of small businesses.
Simple Group Life can be swiftly set up and administered online on a “self-service” basis. No medical questions are asked and membership data is not required to create a policy, making the process quick and easy.
Optimal claims that employers can secure group life quotes and set up policies in as little as five minutes.
Better still, once the policy is set up new members can be added without the premium being affected. So, if your business grows and new members join the payroll during the policy term, then they can benefit from cover without increasing your costs. The premium is then reviewed on renewal.
Simplicity also extends to the benefits payable which can be fixed at either £50,000 or £100,000. These sums are paid tax-free to beneficiaries (subject to registration of the scheme with HMRC under Optimal’s Master Trust).
Reflecting that its targeting smaller SMEs. SME Group Life can cover as few as three employees. There is no upper limit,
Scheme members can also access to a 24-hour confidential telephone Employee Assistance Programme (EAP). There is also an online health portal.