Group risk providers made payouts to 891 sets of dependents totalling over £93m in 2020, just 11 per cent of all working age deaths – meaning a majority of workers’ deaths saw no employer payouts.
Figures from Group Risk Development show 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.
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 just 11 per cent – one in nine – 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 is likely that the majority of the families of people who died from Covid-19 did not receive any death benefit payment at all.
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 per cent says Grid, 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.
Group life costs on average £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’s full group risk claims statistics will be published later this year.
Grid spokesperson Katharine Moxham says: “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.
“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.”