Employer-Sponsored Group Life Insurance Pays Out Circa £100m in 2020 COVID-19 Related Claims

17th March 2021

Group Risk Development (GRiD) has today announced COVID-19 related group life claims for the calendar year 1 January to 31 December 2020*. This is an interim statement prior to publication of GRiD’s full group claims statistics for 2020 later this year.


Up to and including 31 December 2020, the dependants of 891 employees with group life benefits have received pay outs totalling over £93m after losing their loved ones as a result of COVID-19. This represents 884 lump sum death benefit claims, plus the capitalised value of seven dependants’ pension claims where COVID-19 has been recorded as the primary or secondary cause of death on the death certificate or reported on the claim form. The average lump sum death benefit payment was £100,320 and the average capitalised value of the dependants’ pensions was £617,771.


As there is a delay** between the date of death and date of payment, the true impact of COVID-19 lump sum death claims may be understated in these figures by at least 14%, meaning that the true figure may be in the region of £105m with the number of families supported nearer to 1,000. The impact of the second wave of deaths throughout the winter of 2020 in the UK will also not be fully captured by these figures.


Katharine Moxham, spokesperson for GRiD said: “Employer-sponsored group life insurance products are the most popular group risk employee benefit in terms of take-up*** but they are often considered a hygiene factor. However, these figures provide compelling evidence that group life insurance should remain core to all employee benefits packages as it provides significant financial support for dependants at an extremely difficult time.”


Group risk provides support amongst working age population

According to the ONS****, there were 7,961 deaths of working age people that were attributable to COVID-19 registered between 9 March and 28 December 2020, which means the group risk industry supported around one in nine (11%) of these grieving families. While some of the dependants of employees who did not have group life insurance may have had benefits paid from other sources such as individual policies, public sector or uninsured employer arrangements, it’s likely that the majority of the families of people who died from Covid-19 did not receive any death benefit payment at all.


Whether COVID-19 related or not, the death of a loved one is always hard to come to terms with but in the case of an employed individual, the financial consequences of the lost earnings can often add an additional burden to those who are grieving. This further demonstrates the significant value of employer-sponsored group life benefits which help people of working age who often have the most financial responsibilities.


Financial security provides emotional space to grieve

Employers can find it difficult to know how best to support a grieving family financially and emotionally but, by removing any immediate financial concerns, such as mortgage or rent payments, or daily living expenses, via group risk support, dependants are able to find the time to mourn their loss without any unwanted money-related distractions or complications. By giving the family this financial security, the employer allows them the space to grieve. For most employers, the only way of affording such substantial pay-outs is via group life assurance.


From on average of as little as £133***** per employee per year, group life assurance pays out typically between one- and four-times salary under discretionary trust, which means it falls outside of probate and inheritance tax, so can be paid quickly. GRiD would remind employers of the importance of making sure that their employees have kept their nomination/expression-of-wish forms up to date and to move quickly (but diligently) on receipt of the insurance payment to distribute the death benefit appropriately.


Katharine Moxham, spokesperson for GRiD said: “The group risk industry has and will continue to provide support to the loved ones of deceased employees throughout the COVID-19 crisis. Our products really do the heavy lifting when times get tough for employees and we hope that publicising these figures means that their value can be better understood by employers and their staff.”


Notes:

*GRiD interim COVID-19 Claims Survey 2020: GenRe collected data on behalf of GRiD from group life providers identifying COVID-19 claims in the period from 1 January to 31 December 2020 and this represents a comprehensive analysis of the whole market. This only records those cases where there is evidence of Covid or a Covid related condition. Given this information is not always available to the insurer, it may represent an underreporting of actual numbers. Also the figures do not include deaths that occurred after 31st December when the death rate was at its peak.

** The average time to notify a group risk insurer of a COVID-19 related death claim during 2020 was 31 days and the average time taken to pay the claim after that was 19 days.

*** Provided to 9.9 million employees - Swiss Re Group Watch 2020

****2020https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/causesofdeath/bulletins/coronaviruscovid19relateddeathsbyoccupationenglandandwales/deathsregisteredbetween9marchand28december2020#

*****Swiss Re Group Watch 2020


Medical Expenses Consulting (UK) Limited is a member of GRiD