With auto-enrolment now up and running for some firms, with more scheduled to have to adopt it soon, Canada Life has piggy-backed on the opportunity to offer a simple to buy group life insurance product for firms with 2-50 employees.
Using the CLASS platform, the employee’s basic pension data (including name, sex, date of birth and salary) is used to automatically calculate the cost of providing 1x or 2x salary plus £25K and £50K of cover. Other quotes are also available, but these four options provide a good basis for most employers to consider, especially as the minimum annual premium for a scheme is just £480 and premiums should qualify to be set against tax.
Cover is worldwide and maximum catastrophe cover (single event, e.g. a 9/11 type occurrence) is £5m. Premium rates are guaranteed for three years and there is no medical underwriting. Cover can last up to retirement age but there is no continuation option so cover ceases on moving employer or retiring. Cover can increase in line with salary if selected. An employer master trust ensures benefits fall outside the employee’s estate.
Additional benefits include a bereavement helpline and face-to-face counselling, a probate helpline and a nomination of wish form can help ensure benefits are paid to the right people.
What They Say
Marketing director Paul Avis said: “We have a once in a business lifetime opportunity to grow the group life assurance market, as 1.1 million new-to-benefits discussions start to happen. As the war for talent begins to rage, and with every employer now offering a pension, staff retention and attraction is becoming ever more important. Group life assurance could therefore be the most important benefit an employer buys going forward.”
What We Say
"Canada Life says it hopes to grow the group life market by 1% with this new plan. That may not sound a lot, but Swiss Re data tells us that around nine million group lives are already covered, so that would be an increase of 90,000. That’s equivalent to around 7% of all individual term sales last year (again, based on Swiss Re data).
"The plan itself focuses on simplicity and Canada Life estimates it would cost around half what a personal policy would cost so there are cost savings too. Four levels of cover are quoted automatically by Canada Life’s sophisticated CLASS platform and cover up to £150,000 can be obtained with no medical underwriting and no pre-existing condition exclusions. The only real downside is that cover ceases when the employee leaves the employer – whether to go elsewhere or on retirement.
"One additional minor gripe – why do insurers continue to use the outdated word ‘assurance’ when everyone knows and understands ‘insurance’? You can argue a technical case for it, but doesn’t it make more sense for the industry to use consistent generic terms that customers can understand, rather than confusing them with different words for the same thing? This is by no means a criticism of Canada Life – too many insurers (or should that be assurers?) – are guilty of the practice!
"Overall though, Canada Life has set itself an ambitious target – but it just might achieve it."