Salary-linked cover
Benefit set as a multiple of each employee's basic salary, typically one to three times. Cover scales automatically with promotions and pay rises, with no need to recalibrate manually.
Group critical illness cover pays a tax-free lump sum to an employee on diagnosis of a specified serious illness, giving them the means to focus on recovery and removing the immediate financial pressure for their family.
Important: The tax position for group critical illness cover differs from group life and group income protection. Premiums are usually treated as a P11D benefit-in-kind on the employee. Tax treatment depends on individual circumstances and may be subject to change. Always seek independent advice from a qualified tax consultant before proceeding.
A group critical illness scheme is owned and paid for by the employer. If a covered employee is diagnosed with one of the conditions listed in the policy and meets the relevant definition, a tax-free lump sum is paid out, usually directly to the employee.
Benefits are typically structured as a multiple of salary, most commonly one, two or three times annual salary, or as a fixed sum per member (for example £25,000 to £100,000). The right structure depends on the workforce and the budget.
Each insurer publishes a defined list of critical illnesses they will pay out on, typically including cancer, heart attack, stroke, multiple sclerosis and major organ transplants. Definitions vary between insurers, so the right comparison is on conditions and definitions, not just price.
As with group life, each scheme has a Free Cover Limit, the maximum benefit an insurer will provide to a member without individual medical underwriting. Members whose benefit sits above the FCL may need to provide medical evidence for the excess.
Many group CIC schemes include an additional benefit on diagnosis of a critical illness in an employee's child, typically up to a defined sum and to a defined upper age. Often included at no additional cost, and highly valued by employees with young families.
Group critical illness cover has a slightly different tax position to group life and group income protection. The premium is typically a P11D benefit-in-kind on the employee, while the lump-sum payout itself is paid tax-free. The income tax cost on the premium is usually very small relative to the value of the cover.
Premiums paid by the employer are typically treated as an allowable business expense, reducing the company's corporation tax bill. This is subject to the "wholly and exclusively for the purposes of the trade" rule.
Unlike group life and group income protection, premiums paid by the employer for group critical illness cover are usually treated as a P11D benefit-in-kind on the employee. The employee pays income tax at their marginal rate on the value of the cover, but this is typically a small cost relative to the lump sum on offer.
If a valid claim is made, the lump sum is paid to the employee free of income tax. The employee then has the freedom to use it however they need to during their treatment and recovery, with no further tax deductions.
The payout itself does not trigger employer National Insurance contributions. This is one of the features that makes the structure efficient from a cost-of-cover perspective, even with the P11D treatment on the premium.
We compare group critical illness schemes from all major insurers and recommend the structure that best fits your workforce, your wider employee benefits strategy and the breadth of cover you want to offer.
Benefit set as a multiple of each employee's basic salary, typically one to three times. Cover scales automatically with promotions and pay rises, with no need to recalibrate manually.
A flat lump sum is set for each member of the scheme, regardless of salary. Predictable, easy to budget for, and well suited to smaller schemes or workforces with a wide salary range.
Additional cover paying a smaller lump sum on diagnosis of a critical illness in an employee's child, often up to a defined age. Frequently included at no additional cost and highly valued.
Some schemes include partial payouts for less severe conditions or additional benefits on top of a full claim. We'll compare definitions and severity structures across insurers.
The level of benefit each member is granted without medical underwriting. We position the scheme to maximise the Free Cover Limit so most employees get automatic cover from day one.
Group CIC schemes generally provide worldwide cover for the listed conditions, which matters where employees travel or are based internationally. Diagnosis abroad still triggers a valid claim.
Each insurer publishes a defined list of covered critical illnesses, typically including cancer, heart attack, stroke, multiple sclerosis, major organ transplants and several others, often running to 30 or more conditions in total. The exact list and the definitions of each condition vary between insurers, which is one of the things a specialist broker compares closely before recommending a scheme.
On a valid claim, the lump sum is typically paid directly to the employee. The employee then has the freedom to use the money for whatever they need during treatment and recovery, whether that is paying off a mortgage, funding private treatment, supporting their family or simply removing the financial pressure of being unable to work.
Yes. If a valid claim is made, the lump sum is paid to the employee free of income tax. This is one of the most valuable features of group critical illness cover from an employee's perspective: the full benefit amount lands with them without any further deductions.
Usually yes. Premiums paid by the employer for group critical illness cover are typically treated as a P11D benefit-in-kind, meaning the employee pays income tax at their marginal rate on the value of the cover. The cost to the employee is generally very small relative to the lump sum the cover provides on a successful claim.
Yes, many group critical illness schemes include children's critical illness cover as part of the standard package, providing a smaller lump sum on diagnosis of a covered condition in an employee's child, usually up to a defined upper age. This is often included at no additional cost and is one of the most valued features of group CIC for employees with young families.
Premiums are calculated on the profile of the workforce, the benefit level chosen and the breadth of conditions covered. Group critical illness sits between group death-in-service (lowest cost) and group income protection (highest cost) for most workforces. We'll obtain comparative quotes from the major group risk insurers so the cost is benchmarked properly before any decision is made.
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