The benefits of group risk products are severley restricted if payouts are not recieved in a timely manner. John Ritchie airs his concerns.
There is no doubt that classic UK group life provided by employers as an employee benefit is a marvellously efficient way of getting meaningful levels of cover to families.
The cost is fully tax deductible for the employer and using a registered discretionary trust the payment at claim does not have to go through the deceased's estate where there could be significant delays.
So why am I concerned that in a significant proportion of claims that the money is not getting to beneficiaries quickly enough?
The reason is often that the sponsoring employer is not ready to receive the money. The two main causes are that, although the trust is established, a trustee bank account has not been set up or there are no current trustees to exercise the discretion.
Another cause of delay can be caused by nomination of beneficiary records not being maintained. If a trustee knows where the member wants the money to go to naturally the process is quicker.
As advisers, sponsoring employers and insurers we really should be really tuned in to getting benefits paid promptly.
Most families have very little margin for catastrophes with real earnings flat and petrol, rail fares, utilities and food costs steadily rising. So it is up to us to make sure we are all organised to make sure the group life benefit works optimally.
John Ritchie is CEO of Ellipse
