There is no doubt that classic UK group life provided by
employers as an employee benefit is a marvellously efficient way of getting
meaningful levels of cover to families.
The cost is fully tax deductible for the employer and using a registered
discretionary trust the payment at claim does not have to go through the
deceased’s estate where there could be significant delays.
So why am I concerned that in a significant proportion of
claims that the money is not getting to beneficiaries quickly enough? The reason is often that the sponsoring
employer is not ready to receive the money.
The two main causes are that, although the trust is established, a
trustee bank account has not been set up or there are no current trustees to
exercise the discretion.
Another cause of delay can be caused by nomination of
beneficiary records not being maintained. If a trustee knows where the member wants the
money to go to naturally the process is quicker.
What is Ellipse doing about it? Firstly we have
established a Mastertrust and lots of our micro, small and SME group life
schemes use that facility (http://www.ellipse.co.uk/master-trust). We are also building some more online
functionality to help sponsoring employers to be well organised in this
area.
As advisers, sponsoring employers and insurers we really
should be really tuned in to getting benefits paid promptly. Most families have very little margin for
catastrophes with real earnings flat and petrol, rail fares, utilities and food
costs steadily rising. So it is up to us to make sure we are all organised to
make sure the group life benefit works optimally.
(This Blog first appeared in Cover magazine)
