Insurance Distribution Directive (IDD)

Product Lifecycle Management process

You may also like to know how we develop our products. We have a Product Approval Process in place to oversee Group Protection product design, and make sure we continue to meet our customers’ needs.

Target market information

To help you understand the intended target market for our Group Protection products we have outlined the types of employers and employees they’re suitable for. More details about the products and choices are available in our technical guides, which you can find on our literature library.

If you have any questions or comments about the target market, please approach your usual Group Protection contact.

Group Death in Service Benefits

Group death in service benefits are commercial policies covering a liability to pay benefit from an employer’s pension or group life assurance scheme if an insured person dies.

  • We usually pay benefit to the scheme trustees, who pass it on to the employee’s dependants’ in line with the scheme trust and rules. Alternatively the trustees can request us to pay benefit direct, once they’ve identified who is to receive the benefit.
  • The employer and trustees are responsible for paying all premiums. An employer may choose to recover the cost of employee chosen cover through payroll. 

Other variations of group life assurance policies allow employees to choose to cover their spouse or partner, or firms to protect their business if a self-employed equity partner or LLP member dies. Find further details below. 

Group Life Assurance covers the trustees’ liability to pay a lump sum if an insured person dies.

Group Life Assurance can be set up in different ways:

  • As a standard policy, with a fixed benefit level chosen by the employer for each group of eligible employees. An employer can choose to set this up:
    • to cover the benefits of a registered scheme; or
    • as one or more Excepted Group Life Policies
  • As a flexible policy, where the employer funds a minimum benefit level, and allows employees a regular opportunity to top this up by choosing from a range of benefit levels. An employer can choose to set this up:
    • to cover the benefits of a registered scheme; or
    • as one or more Excepted Group Life Policies.
  • As a voluntary policy, where employees have a regular opportunity to decide if they want cover themselves, and a range of benefit levels to choose from. An employer can only set this up to cover the benefits of a registered scheme.
  • As a voluntary policy, where employees have a regular opportunity to decide if they want to cover their spouse or partner, with a range of benefit levels to choose from. An employer can choose to set this up:
    • to cover the benefits of a registered scheme; or
    • as a non-registered scheme.
  • As a policy covering equity partners or Limited Liability Partnership members. A firm can choose to set this up to:
    • Protect family and dependants by covering the benefits of a registered life assurance scheme; or
    • Protect family and dependants by setting the cover up under one or more Excepted Group Life Policies; or
    • Protect family and dependants by setting the cover up under a non-registered scheme; or
    • Protect the business under a non-registered commercial arrangement. For example insuring a partner’s investment in the firm, which the firm may have to return if they were to die.

We offer access to our Group Life Mastertrust to employers wishing to provide registered group life assurance benefits to employees, but don’t want to set up or manage their own registered scheme 

Dependants’ Pension covers the trustees’ liability to pay a monthly income from a registered scheme to a dependant of an insured employee who dies. Employers can also choose to insure the monthly income that escalates each year to help protect it from inflation.

An employer chooses from a range of cover options. For example the benefit levels, and if they wish to cover all employees or a defined group such as all managers.

We’ll confirm the employer’s choices in the policy. 

We also provide access to a comprehensive Worklife Solutions programme for all customers at no extra cost.

Target Market

The eligible market is any UK employer who wants to insure some or all of its Group Life Assurance and/or Dependants’ Pension Scheme liabilities. 

Lump sum Group Life Assurance benefits have been provided by employers to their employees since the 1920s. Membership in such schemes has grown and according to Swiss Re Group Watch 2018 there are now around 9.5 million lives insured within just over 53,000 policies.

Suitable for:

  • Employers looking to protect the lives of at least ten of its employees, equity partners or limited liability partners. (If the employer reduces in size after cover starts, the policy will continue while it insures at least five employees).
  • Employers looking to insure a lump sum of up to £10 million for each insured person (excluding voluntary policies). This is a combined maximum for Group Life Assurance and the equivalent lump sum value of Dependants’ Pension.
  • Employers looking for a voluntary policy with no minimum benefit, that allows employees to choose up to £250,000 cover.
  • Employers looking to cover all employees, or a group defined by role, grade, service or pension membership.
  • Employers looking to financially support the family and dependants of an employee who dies with a lump sum payment, a monthly income, or both.
  • Partnerships looking to financially protect their business against the death of a self-employed equity partner or Limited Liability Partner member.
  • Employers looking to provide cover to employees up to age 75 years.
  • Employers looking to recruit and retain employees with an employee benefits package.
  • UK employers looking to protect a largely UK based workforce. 
  • Employers who want to fund cover, as well as those who want to recover the cost of optional cover from employees.
  • Employees with families and dependants who rely on the employee’s income, time or care.
  • Group Life Mastertrust is suitable for employers looking to provide registered group life assurance benefits for employees, but don’t want to set up or manage their own registered scheme.

 
Unsuitable for:

  • Employers based outside the UK.
  • Employers looking to financially protect their business against the death of key directors or employees (key person cover for people without self-employed tax status).
  • Employers looking to individually select and include employees for cover.
  • Employees who may not have families or dependants relying on them for their income, time, or care. However if such employees were excluded from cover:
    • Employers need to carefully consider discrimination risks. For example, it could create an age discrimination risk if the excluded group was mainly formed of younger employees.
    • It could affect the inclusive nature of the cover which allows us to provide a policy specific level of cover without the need for medical underwriting. Increasing the need for medical underwriting carries the risk of excluding employees from the cover they need.
    • It increases administration.
  • Employees who have savings, investments or individual insurance which provide sufficient financial security for their family and dependants if the employee were to die.
  • In respect of flexible and voluntary arrangements, these are unsuitable for employers without an administration system that helps them record employee benefit choices, and provides us monthly membership details.
  • Joining our Group Life Mastertrust, or setting up a new registered scheme to distribute Group Life Assurance or Dependants’ Pension benefit, is unsuitable for employees who have Enhanced or Fixed Protection from the Lifetime Allowance tax charge. Such employees will lose this protection if they join another registered scheme. Instead, employers could consider setting up an Excepted Group Life Policy for these employees.
  • Using our Group Life Mastertrust, or another registered scheme, to distribute Group Life Assurance may be unsuitable for employees with registered pension scheme savings above or approaching the Lifetime Allowance. A tax charge could apply to registered scheme benefits once a person has used their Lifetime Allowance. Instead, employers could consider setting up an Excepted Group Life Policy for these employees.
  • Employers looking for an insurer to provide a master trust for Dependant’s Pension or Excepted Group Life Policy cover.
  • Employers looking to insure employees without using a trust or scheme.
  • Employers looking to provide benefit under a scheme type that isn’t shown against the relevant policy set up choice shown above.

Group Critical Illness Cover

Group Critical Illness Cover can pay out a tax free lump sum if an insured person meets the definition of one of the policy’s insured conditions, and survives for at least 14 days. This payment could help an employee cover the cost of cancer drugs, palliative care or home adaptations.

An employer chooses from a range of cover options. For example the benefit level, conditions covered, and if they want all employees covered or a defined group such as all managers. Insured employees’ children are automatically covered, and there’s an option to set up cover for employees’ spouses and civil partners too. 

Group Critical Illness Cover can be set up in three different ways:

  • As a standard arrangement, with a fixed benefit level chosen by the employer for each group of eligible employees.
  • As a flexible arrangement, where the employer funds a minimum benefit level, and allows employees a regular opportunity to top this up by choosing from a range of benefit levels.
  • As a voluntary arrangement providing employees a regular opportunity to decide if they want cover, and a range of benefit levels to choose from.

We’ll confirm the employer’s choices in the policy.

All Group Critical Illness Cover is a commercial insurance where the employer is responsible for submitting claims and paying premiums. An employer may choose to recover the cost of any employee chosen cover through payroll.

We also provide access to a comprehensive Worklife Solutions programme for all customers at no extra cost.


Target Market:

The eligible market is any UK employer who wants to insure some or all of their liabilities to Critical Illness Cover for their employees. 

Group Critical Illness Cover has been provided by employers to their employees since the 1990s.  Membership has grown and according to Swiss Re Group Watch 2018 there are now 571,848 lives insured within just over 3,600 policies. 


Suitable for:

  • Employers looking to help provide financial protection for at least ten of its employees, equity partners or limited liability partners, against the risk of a critical illness. (If the employer reduces in size after cover starts, the policy will continue while it insures at least five employees).
  • Employers looking to cover all employees, or a group defined by role, grade, service or pension membership.
  • Employers looking to cover employees for up to 5x earnings or £500,000 for employees under a standard or flexible arrangement, or up to £250,000 under a voluntary arrangement.
  • Employers considering covering employees’ spouses and civil partners for up to £250,00 under a standard or flexible arrangement, or up to £150,000 under a voluntary arrangement.
  •  Employers who are happy to cover insured employees’ children aged between 30 days and 21 years, for 25% of the insured employee’s benefit up to £20,000.
  • Employers looking to provide benefit cover to employees up their state pension age or a fixed age up to 70 years.
  • Employers wanting to insure 12 core conditions, and employers looking to extend this to include a further 26 conditions.
  • Employers looking to recruit and retain employees with an employee benefits package.
  • Employers who want to fund cover, as well as those who want to recover the cost of optional cover from employees.
  • UK employers looking to protect a largely UK based workforce. 

Unsuitable for:

  • Employers based outside the UK.
  • Employers looking to individually select and include employees for cover.
  • Employer’s looking to protect their business against the risk of a key person suffering an insured condition.
  • Employers uncomfortable providing employee benefits subject to pre-existing and related conditions exclusion. We apply a pre-existing and related conditions exclusion to cover when an employee first joins, and for each benefit increase. This could mean an employee isn’t covered for one or more insured conditions. We provide details of these exclusions in our quote and policy. We can also provide these details in an electronic leaflet you can share with your employees.
  • In respect of the children’s cover we automatically provide for all eligible employees, this may be unsuitable for eligible employees without eligible children. However:
    • we’ll still include such employees for cover;
    • our pricing recognises while some employees have no children, others may have lots, and this situation may change in between policy accounts; and
    • employers who choose to exclude employee groups who may not have children could create discrimination risks.
  • In respect of flexible and voluntary arrangements, these are unsuitable for employers without an administration system that helps them record employee benefit choices, and provides us monthly membership details.

 

Group Income Protection

Group Income Protection is a commercial policy that pays a monthly income if an insured employee cannot work because of a long-term illness or injury that meets the policy’s incapacity definition. We usually pay the benefit to the employer, who’ll pass it on to the employee through payroll.

An employer chooses from a range of cover options. For example the benefit level, the length of absence before payments start, and whether to cover all employees or a defined group such as all managers.

Group Income Protection can be set up in two different ways:

  • As a standard arrangement, with a fixed benefit level chosen by the employer for each group of eligible employees.
  • As a flexible arrangement, where the employer funds a minimum benefit level, and allows employees a regular opportunity to top this up by choosing from a range of benefit levels.

We’ll confirm the employer’s choices in the policy.

When appropriate, we work with employers to provide early intervention and rehabilitation for employees who are absent from work because of long-term illness or injury. With our help the employee may be able to cope with, or overcome their incapacity enabling a quicker return to work.

We also provide access to a comprehensive Worklife Solutions programme for all customers at no extra cost.


Target Market:

The eligible market is any UK employer who wants to insure some or all of its Group Income Protection liabilities to employees. 

Group Income Protection has been provided by employers to employees since the 1970s. The Swiss Re Group Watch 2018 report showed around 2.4 million employees insured within just over 17,000 policies.

Suitable for:

  • Employers looking to protect the income of at least ten of its employees, equity partners or limited liability partners, against the risk of a long-term illness or injury that stops them working. (If the employer reduces in size after cover starts, the policy will continue while it insures at least five employees).
  • Employers looking to protect up to 80% of earnings, limited to £350,000 per year for each employee.
  • Employers who may also wish to insure pension contributions and employer National Insurance contributions.
  • Employers looking to cover all employees, or a group defined by role, grade, service or pension membership.
  • Employers looking to support absent employees back into the workplace following incapacity.
  • Employers looking to provide income protection benefits to employees up to their state pension age, or a fixed age up to 70 years.
  • Employers looking to provide income protection for a limited period allowing an employee time to recover, or to come to terms with a life-long incapacity.
    • Employers can choose to insure a limited term benefit that stops payments after a fixed period between two and five years.
    • Employers looking to provide added support can insure a lump sum payable if an employee hasn’t recovered when the limited term benefit stops. This could help fund a settlement agreement, treatment or home adaptations.
  • Employers looking to financially support employees whose long-term incapacity only allows them to work reduced hours or in a lesser role. Group Income Protection can pay a partial benefit to help top up their reduced income.
  • Employers looking to recruit and retain employees with an employee benefits package.
  • UK employers looking to protect a largely UK based workforce. 
  • Employers looking to insure a set benefit level for eligible employees; and employers looking to fund a minimum benefit level with regular opportunities for employees to top it up.

 
Unsuitable for:

  • Employers based outside the UK.
  • Employers looking to protect against the cost of short-term absence.
  • Employers looking to solely protect their business against the cost of absence, and do not wish to continue income for absent employees beyond the statutory minimum.
  • Employers looking to individually select and include employees for cover.
  • The availability and level of some state benefits could be affected by a person’s income, the source of that income, savings, or household income. Group Income Protection cover is unsuitable for:
    • Employees that will, can, or are prepared to, rely on Employment Support Allowance and similar State benefits.
    • Employees on the lower level of the earnings scale and for whom reliance on state benefits may be more appropriate.
      However employers should carefully consider discrimination issues if they wish to exclude certain groups of employees from cover.
  • In respect of flexible arrangements, these are unsuitable for employers without an administration system that helps them record employee benefit choices, and provides us monthly membership details.

 

Ill Health Early Retirement Benefit

Our Ill Health Early Retirement Benefit policy aims to provide insurance to pay a lump sum if:

  • an insured member qualifies for, and takes, ill health early retirement under the rules of the employer’s pension scheme;
  • the member meets the definition of permanent incapacity under the policy; and
  • a strain cost is caused by the member retiring early due to ill health.

The strain cost is the extra cost to the pension scheme as a result of the member retiring early due to ill health. We’ll agree the lump sum to insure for each member when cover starts, and update it at each annual renewal date. This means the lump sum will not exactly match the strain cost to the pension scheme. We’ll pay the lump sum to the pension scheme trustees.

Ill Health Early Retirement Benefit is available in different formats:

Pension fund actuary calculation basis:

  • Your pension fund actuary will calculate the strain cost under the pension scheme at the policy start date and each annual renewal date.
  • We’ll insure a lump sum benefit to provide cover for this potential strain cost.

Target basis:

  • The employer provides us with full details of the pension scheme rules including the ill health early retirement basis.
  • We use this information and our strain cost assumption tools to calculate an amount that targets the anticipated strain cost for each employee. We round these costs to the nearest multiple of scheme earnings, and use them as the insured benefits in our quote. We’ll confirm the multiples of scheme earnings we’ve used in a spreadsheet included in our quote pack.
  • The employer will need to agree the benefit levels at the policy start date and each annual renewal date. 

We’ll also consider requests from employers looking to insure part of the strain cost.

 
Target Market: 

The eligible market is any employer funding ill health early retirement pension strain costs under its pension scheme.

Suitable for:

  • Employers looking to insure the approximate ill health early retirement strain cost to their pension scheme. It’s also suitable for employers looking to insure a proportion of this cost.
  • Employers looking to insure up to £4.5 million per employee.
  • Employers with at least 100 active pension scheme members they want to insure. (Membership can reduce to 50 members over the life of the policy).
  • Employers looking to provide insurance up to its pension scheme’s normal pension age, but no later than the State Pension Age.
  • Employers with an administration system that is capable of providing annual data.
  • Employers looking to agree policy eligibility conditions; and cover all active pension members who meet them.
  • UK employers looking to insure a largely UK based workforce. 
  • Employers who understand that employees may need to meet conditions before cover starts or increases. This could mean we will not start cover for a new member, or increase cover for an existing member, who is already in poor health. Our quote and technical guide will confirm the entry and increase conditions that apply.
  • Employers who are able to submit claim information ideally within four weeks, and no later than 90 days after the ill health early retirement date.
  • Employers with employees who will engage in the claims process providing the detail we need.
  • Employers who understand we’ll assess claims against the policy’s permanent incapacity definition, which may differ from the ill health early retirement requirements shown in the pension rules. Contact us if you have any concerns.
  • Employers prepared to seek tax advice on paying benefit into the pension scheme.

Unsuitable for:

  • Employers looking to insure the strain cost of early retirees who don’t meet the policy’s permanent incapacity definition.
  • Employers with sufficient funds available to pay strain costs, and who wish to accept the risk for potentially higher than expected numbers of ill health early retirements.
  • Employers relying on us for actuarial advice or certainty of the strain cost values. We suggest such employers talk to their pension fund actuary.
  • Employers who want the lump sum benefit insured under the policy to exactly match the strain cost to the pension scheme.
  • Employers looking to cover the strain cost of former employees retiring early due to ill health.
  • Employers looking to cover less than 1,000 active members without a 12 month exclusion for pre-existing conditions applying to new and increased cover. Further details of this exclusion are included in our technical guide.
  • Employers based outside the UK.
  • Employers looking to individually select employees for cover.