A Window of Opportunity: Group Insurance at INSTANDA


Posted on 6th October 2021

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A Window of Opportunity: Group Insurance at INSTANDA

Posted on 6th October 2021

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Group health and protection insurance policies are often overlooked through lack of awareness, understanding and perceived cost. In many cases, Group Insurance provides better value for money than individual cover providing a broader range of benefits at a lower cost.

Employers who provide group policies [for their employees] can open up a number of opportunities and competitive advantages for themselves that can positively affect their overall ROI.

In this article we’ll explain the different ways in which employers, insurers and employees can benefit from the implementation of group policies.


Group Insurance vs Individual Insurance

Risk Spreading

A key advantage of a group health or protection policy is that cover can ordinarily be provided to a greater number of people. An individual policy will usually require medical underwriting which may result in cover being declined, whereas group policies will often provide cover for most employees free from medical underwriting.

This is primarily due to a spread of risk across both healthy and potentially impaired lives which allows greater coverage.

Whereas with individual insurance, this isn’t possible as the risk is only attributed to one person.

The insurer and the policyholder may pay less for the same level of protection versus individual equivalent cover. This provides good value for the employer, providing a great recruitment or retention tool for attracting and maintaining employees, whilst, providing essential health and protection cover for your workforce and their loved ones.

Furthermore, the ROI can be significantly greater for the business where a healthy and motivated workforce are likely to be more productive and, in the event of sickness or long term absence, speedy treatment and/or financial benefit can be provided to cover loss of earnings.


Tax Efficiency

Group Health and Protection policies

Most group life policies are written under a discretionary trust which means that if a death benefit is paid out it will normally fall outside of the deceased members estate for Inheritance Tax (IHT) purposes. The current IHT charge above the current nil rate band of £325k is 40%, therefore writing the policy under trust can be very tax efficient.

Additionally, premiums paid by the employer for Group Health and Protection cover are normally classified as a business expense and will benefit from corporation tax relief.

Furthermore, Group Life and Group Income Protection cover funded through the employer is not usually subject to a P11D benefit in kind charge on the employee.

So, both the employer and employee can benefit on the tax efficiencies that Group schemes enjoy.


Master Trust

A Master Trust is a common feature on Group Life schemes normally provided through the insurer. Aside from the tax benefit already highlighted, there are other advantages for the employer in electing to participate in a Master Trust.

  • Saves time and hassle of an employer setting up and managing their own trust.
  • There is no need to appoint trustees as a Master Trust will already have these in place
  • No additional cost
  • As a discretionary trust, it allows the benefits to be paid out speedily, without waiting for probate and with no inheritance tax charge.


Group Income Protection

Group income protection (GIP) schemes provide cover for loss of earnings should an employee be absent from work due to long term illness or injury. This will usually be conditional on meeting the insurers definition of incapacity. The majority of GIP schemes also provide added value wellbeing services such as a comprehensive Employee Assistance Programme (EAP), providing access to telephone or F2F counselling services, or a digital GP providing a virtual GP consultation and prescription service.

The importance and need of wellbeing services as part of a Group Health or Protection scheme has been highlighted further by the COVID-19 pandemic. This is particularly prevalent regarding mental health with a large number of employees needing support services at a critical time. Added value services such as an EAP, stress counselling helpline, or, holistic wellbeing services can help individuals by providing necessary counselling and treatment where necessary.


The Future of the Group Insurance Industry

The workplace is constantly evolving with changes in working patterns, job roles and customer expectations driving changes in both consumer and insurer behaviour. This should lead to increased product innovation as insurers move away from standard traditional product models to a more holistic approach to cater for individual needs.

This should also encompass a more digital focus on the consumer lifecycle from quote to claim, creating time and cost efficiencies whilst providing a more seamless customer experience.

The underlying group health and protection insurance need has never been greater. The Covid 19 pandemic has certainly triggered greater awareness for health and protection cover amongst both individuals and employers.

However, whilst the majority of protection cover is provided through a Group arrangement, the protection gap (shortfall in cover for both individual and Group Life cover) is still estimated at circa £2.4 trillion in the UK. This is an area of focus that needs addressing sooner rather than later.


INSTANDA Launches Group Insurance Options

You can now design, build and implement group insurance products in a matter of weeks with our flexible, user friendly platform. There are no coding skills required, brokers can also make simple changes to policies.

It doesn’t matter what size or type of firm you are, our platform can adapt to your needs.

Technology has changed the way the world works, it’s only a matter of time until it changes the way insurance works. Contact us today to ensure you’re ready for when that happens.



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