Unum has created a Group Life master trust, allowing employers who offer their employees group life cover to pay out claims free of tax.
The changes to Unum's policy is effective as of 5 July 2010.
Previously, companies would have to set up their own discretionary trust - the only way for the claims to be paid tax-free - which can be expensive, requires ongoing maintenance and is usually time consuming.
By removing the requirement for firms to manage this process themselves, Unum says it is helping to remove business costs.
It hopes this will encourage firms considering offering group life cover, particularly SMEs wanting to provide financial protection benefits, such as life cover, in a cost effective way.
Helene Gullen, commercial marketing manager at Unum, says: "In our experience, the need to set up a trust can act as a real barrier to firms introducing this form of financial protection for their workforce, particularly with SMEs.
"By using the Master Trust, for which there is no additional charge, our clients can ensure that they get all of the tax benefits with none of the associated time-consuming and complex administration."
Other changes to Unum's Group Life offering include:
- Maximum Free Cover Limit (‘FCL') has increased from £1.75m to £1.8m
- Removal of the time limit on late entry - the only additional underwriting requirements for late entrants (joining more than six months after they are first eligible) will be a short form for benefits in excess of £250K and below FCL
- An increase in the maximum lump sum available from 12 to 20 times salary for schemes of more than 20 lives where there is no dependants pension on the group with Unum or another insurer
- Increase in Unum's standard £15m travel restriction rule to £25m
- Categories of 3 lives or more will eligible for a Free Cover Limit - previously it was set at a minimum of 5 lives. This will enable more coverage to be applied automatically, reducing administration and underwriting requirements
