5 reasons employees value life insurance

Why job seekers and current employees value life insurance

When it comes to employee benefits, life insurance is one of the most popular choices that employers opt to use to attract top talent. Whether you get group life insurance or tax-efficient relevant life cover, it’s an affordable way to offer something to employees that they really value. If you’re not already offering life insurance, you may want to start thinking about adding it to your benefits package. Here are 5 reasons why employees value life insurance and how it can help attract high calibre, loyal employees.

  • Long-term job security

The absence of committed employees

A few decades ago, employees and organisations had a sort of agreement. Employees would be loyal and committed to the company they worked for and in return, the organisation would take care of them. As a result, people stayed within the same job for 20-40 years. Over the last few decades, the job market has changed. Employees tended to change jobs more often looking for more challenges and opportunities. Unfortunately, in exchange, organisations didn’t provide the same level of commitment that they used to.  With an uncertain economy, inflation and high unemployment rates, short-term or zero-hour contracts aren’t as attractive as having a secure job with guaranteed income.

A change post-recession

Since the recession, the demand for long-term job security has increased. Randstad UK conducted research and found that 52% of people look for long-term job security when looking at potential employers. Employees tend to feel less-stressed at work and perform better when they feel like their job is not at risk. Finding a secure job that they enjoy encourages motivation, productivity and decreases absenteeism.

Investing in life insurance creates loyal employees

When a company is willing to provide a competitive benefit such as health and life insurance it shows dedication to their employees’ well-being and overall health. When a company shows commitment and care in that way, there will be increased loyalty amongst employees. With such benefits coming from work, it is likely to mean that they will want to stay in the job for longer to reap the benefits. It also means that if the company is willing to invest long-term in the employee, they have a better sense of long-term job security. This decreases any worry or stress, increases productivity and motivation and keeps the employee happy and working with the company for longer.

  • Peace of mind and family protection

Ultimately, people work in order to make money, pay the bills and look after themselves and their family. By offering life insurance, you’re adding extra value to the job role. In addition to this, employees value life insurance because it brings them a sense of financial security.

Money worries can be a source of stress

A lot of people tend to worry about money. This can be a distraction and a source of stress, impacting employees focus at work. Life insurance provides a sense of financial security if something were to happen to them, which can give employees peace of mind. It can help to mitigate money worries and uncertainty and help employees gain back their focus at work.

Particularly, if employees have a family, they value the safety net that life insurance provides. Providing a life insurance benefit marks an employer as an employer of choice when looking for a job. It demonstrates a level of care for the employee as well as their family.

  • It works as a natural accompaniment to pension saving

If employees have worked towards their pension policy and built it up, they could be reaching the end of their lifetime allowance. Having an additional life insurance policy can help to offset against inheritance tax and adds to their financial security for their family. Employees value life insurance in this way because it can help to provide more for their family.

Death in service benefits

Traditionally, death in service benefits provided by employers count towards their allowance. If employees have already put towards their pension, the death in service benefit could tip them over the edge of the lifetime allowance.

The lifetime pension allowance

In April 2017, the lifetime allowance fell from £1.25m to £1m. Any savings over and above this amount are heavily taxed. A life insurance policy that is written in trust, such as relevant life insurance doesn’t count towards this lifetime allowance. Therefore, it does not require any tax to be paid on it and won’t take your employees over the limit.

Additionally, if employees are already over the limit or close to, this type of life insurance policy can actually offset against the inheritance tax that would be paid on the pension. Therefore, their family will be much better off.

Choosing where the money goes

Even if employees don’t have a substantial pension pot, they will still value this type of policy. Their family do not have to worry about the inheritance tax payments, receiving more of the financial payment and the employee can choose their own beneficiaries. The beneficiaries are the people to whom you would like the money to go. Employees can choose who they would like to receive the financial payment and in which quantities, so they have more control over where the money goes.

  • Save money on tax

When an employee has to take out a personal policy, this comes out of their taxed income so technically tax is paid on the policy premium. In addition to this, when the lump sum is taken out, a personal policy is normally subject to inheritance tax if it isn’t written in a trust. However, life insurance offered by the business can come tax-free for both the employee and the employer.

Relevant Life Cover

Relevant life insurance insures the individual but is paid for by the business. As a result, the policy is tax efficient for both the individual insured and the company. The employee is exempt from paying income tax and the business is exempt from paying corporation tax on the payments. In addition to this, both parties do not need to pay national contributions on a relevant life policy.

Receiving more money for the family

As relevant life policy is written into a trust, the family will also not have to pay inheritance tax on the lump sum. Employees value life insurance that provides more protection for their family. With relevant life, they can get a tax-free amount for their family.

  • More protection for their family at no expense to them

Some employees may already have their own personal protection policy but having an extra financial security net can be really beneficial for their family. It means that their family can have a better life after their death by providing additional funds. Employees value life insurance through the business because it can add extra funds so that the money can:

  • Replace the loss of income
  • Help to pay off the mortgage
  • Pay off any other debts
  • Pay for children’s education
  • Cater for additional childcare
  • Give the family financial support and time to grieve

Having two policies can help cover all the debts whilst still maintaining their current lifestyle. By getting life insurance through the employer, it means they don’t have to spend the extra money.

When employers provide life insurance, it can really add value to the role they will be hired to do. That’s why employees look for an employer that provides them with the extra protection, long-term job security and peace of mind when it comes to financial protection for their family.


5 Reasons Employees Value Life Insurance - Business Cover Expert
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5 Reasons Employees Value Life Insurance - Business Cover Expert
A competitive benefits package can help to recruit and retain high-calibre employees. Employees value life insurance the highest.
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Business Cover Expert
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