Group life sum assured

~3 min read

Category: Group life · Reviewed by Jake Leat, Associate Director · Last reviewed 2026-06-10

In short: The group life sum assured is the lump sum payable by the insurer on the death of each insured employee. It may be expressed as a defined multiple of the employee’s salary (e.g. 4× pensionable salary) or as a fixed cash amount per scheme category. The total sum at risk across the scheme — the sum of all members’ sums assured — is the primary driver of the scheme premium.

Category: Group life Also known as: Sum at risk, cover amount Typical: Multiple of salary (most common) or fixed amount Related concepts: Group life insurance lump sum, Group risk pricing factors, Free cover limit group risk

Definition

The sum assured is recalculated each time an employee’s salary changes (most schemes use the salary at the policy anniversary; some recalculate on each pay review). It is also recalculated where the scheme rules change — for example if a 4× scheme is increased to 5×, all members’ sums assured rise accordingly.

Legal / Regulatory basis

The sum assured is governed by the policy and trust deed. The FCA Handbook (ICOBS 6) requires that scheme members be told the basis on which their sum assured is calculated. For registered group life schemes, sums assured count against the deceased’s lump sum and death benefit allowance per Finance Act 2024.

Scope of cover

The scheme’s total sum at risk is the sum of all members’ individual sums assured. The insurer uses this aggregate at risk to calculate the premium (premium = sum at risk × unit rate, expressed per £1,000). For group IP, the equivalent is the aggregate insured monthly benefit roll.

Practical example

A 50-employee scheme with 4× salary cover and a £2.5m total payroll has a total sum at risk of £10m. If the insurer’s unit rate is £1.20 per £1,000, the annual premium is £12,000. Each individual employee earning £40,000 has a personal sum assured of £160,000.

References

Finance Act 2004, Part 4 — https://www.legislation.gov.uk/ukpga/2004/12
Finance Act 2024 — https://www.legislation.gov.uk/ukpga/2024/3
Financial Conduct Authority, FCA Handbook, ICOBS 6 — https://www.handbook.fca.org.uk/handbook/ICOBS/6/
Group Risk Development (GRiD), Group Risk Market Report 2025

This entry is part of the Apex Insurance Wiki. Last reviewed by Apex Insurance Brokers on 2026-06-10. Next review: 2026-12-10.

Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.

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