Group Life Cover is life assurance provided by the company for its employees (i.e. the premiums are paid by the employer to cover the employees). It provides a lump sum on the death of a member of a scheme.

On the death of a scheme member a lump sum is paid to trustees. The trustees pass this along to the member’s estate. There is a maximum amount that can be paid tax free. If selected, an annual dependent’s pension is also paid and taxed as income. The amount is specified at the outset (e.g. a fixed amount or a multiple of salary) and the premiums are paid by the employer.

This is a way for an employer of providing financial security to the family of an employee in the event of that employee’s death during service. This provides important peace of mind to employees. Legally, the benefit is usually provided via a company’s pension plan.