Bereavement payments
There is limited government assistance available in the form of 'bereavement payments'. These have recently been reviewed and will be changing from April 2017; however a select committee of MPs have pointed out that there remain significant gaps.
The current benefits available under State Pension age are:
- £2,000 one-off tax free lump sum to a spouse or civil partner – but not a cohabitee
- Up to £112.55 per week payable to a surviving spouse or civil partner whilst entitled to Child Benefit.
- This is not payable if there was not a marriage or civil partnership BUT
- It will cease on remarriage or starting cohabitation
- If over age 45 an age-related payment of up £112.55 per week payable for 52 weeks.
- Again this is only payable to a widowed spouse or civil partner without dependent children.
- The weekly payments are subject to income tax and dependent on the amount of National Insurance contributions paid by the deceased.
From April 2017 the structure will be called Bereavement Support Payment offering:-
- Eligibility will still be limited to a surviving spouse or civil partner, and the deceased must have paid sufficient national insurance in the previous year
- If there are dependent children the payment will be around £5,000 plus 12 monthly payments of about £400
- If there are not dependent children the payment will be around £2,500 plus 12 monthly payments of about £150
- All payments are tax free, not means tested and are disregarded for the purpose of Universal Credit
- Remarrying or cohabiting will not affect payments
- The age of the claimant will not affect payments.
The key omission is there is no cover of cohabitees, even if there are dependent children. And of course the single people in our case studies will still leave behind family and friends.
Tax efficient employee benefit
Often obtaining individual insurance cover for relatively small amounts can be difficult. It is not cost effective for an insurer to offer a product where premiums are too low, so perhaps it is not surprising that recent research by the Syndicate, Protection review found that 34 per cent thought protection insurance was a luxury.
Costs of funerals do not have to fall on family, friends and work colleagues. Employers can offer group life assurance to their employees as a cost effective and tax efficient benefit that often requires no individual medical underwriting and means that should the worst happen their family would be assisted financially.
Alan Sparks, Research & Development Consultant, Canada Life Group Insurance
