Following the mass rollout of the Covid 19 vaccines, plus delays in treatment due to NHS focus on Covid for 18 months, cancelled appointments and screening etc the death rate in the UK – and many other developed countries – has risen quite steeply. Interestingly, lots of very healthy young people, with no known medical conditions, are reported by the MSM as having “died suddenly.” There is a great reluctance to address the root cause of sudden death amongst the under 45s of course, or investigate further, but we need to understand and acknowledge the trends within the mortality data.
As time goes on and the death toll rises, it makes sense to offer new Life and critical illness insurance products to UK consumers. There needs ot be some innovative thinking in terms of flexibility, affordability and marketing too.
Perhaps insurers should think about noting vaccine status as an integral part of the Life cover quote process, not just smoking, age, occupation and medical history? Asking whether someone has ever ridden a moped, rather than taken 4 shots of the vaccine, is probably barking up the wrong risk tree frankly.
In any case, the opportunity is there for a different approach when it comes to marketing Life and critical illness cover, the big question is can the industry grasp the nettle?
GRiD, the industry body for the group risk sector, believes the recent excess deaths data published by the Office of National Statistics demonstrates the need for death-in-service support, otherwise known as group life assurance. According to ONS, in the week ending 13 January 2023, 17,381 deaths were registered in England and Wales; this was 19.5% above the five-year average.
The early passing of these individuals could leave many households without a breadwinner or source of income. GRiD wants more employers to consider offering group life assurance to their employees to ensure that in the event of the death of a member of staff, the employer can offer a financial safety net to their family and dependants.
What is death in service / group life assurance?
Death in service is a payment made by an employer to the family of a deceased employee. It is usually paid as a tax-free lump sum and is generally calculated as a multiple of the employee’s annual salary but can also be a taxable pension, or both. The exact amount can vary between employers but a payout of around four times a salary is typical. This substantial sum of money can be used by dependants to continue mortgage payments, pay for the funeral, or cover any other financial commitments.
The latest data from the GRiD 2022 Claims Survey shows that in 2021 the industry paid out 13,479 death claims at an average of £116,414, and Swiss Re Group Watch 2022 highlights that 10.51 million employees are insured for death in service benefits.
Katharine Moxham, spokesperson for GRiD, said: “During COVID, we saw many more people become aware of their own mortality and that of their close family, but as life returns to normal, it’s human nature to think these things won’t happen to us. However, this data is a stark warning that many families are indeed losing loved ones unexpectedly. This heartache can be hugely amplified, especially if the remaining family are not able to cope financially.”
GRiD warns that the product name ‘death in service’ can be misunderstood and that employees may not fully understand that the product simply pays out if the individual is insured and is on the payroll – they do not need to die in the workplace itself to qualify for the benefit.
Death in service is generally of a significantly lower cost than other group risk products. A further benefit to the employer is that premiums can generally be offset against corporation tax.
Katharine Moxham continued: “This is very much a peace-of-mind benefit. The employee will never see the funds but they can benefit by having the reassurance that should something happen to them, their family will not struggle for money in the short term.”