Death in unemployment and death in incapacity

How Employee Life Cover supports your employees beyond employment

As an employer, providing Employee Life Cover (ELC) is one way to help protect your employees and their families if the unexpected happens. What many employers may not realise is that ELC can continue to offer protection even after an employee stops working for you, in specific circumstances.

Two key features of B&CE’s Employee Life Cover are its death in unemployment and death in incapacity benefits. Understanding how this works, and where the State Pension age rule applies, helps you manage expectations and ensure you and your employees are properly protected.

What does ELC’s death in unemployment cover?

ELC’s death in unemployment applies when an employee leaves your business and becomes unemployed but sadly dies within a defined period.

Under ELC, a benefit may be paid if:

• The employee was under State Pension age at the date of death.
• Death occurred within two years of the last ELC contribution being paid.
• The employee remained continuously unemployed during this time.
• They had at least one year of continuous ELC membership, which can include membership with previous employers.

The amount paid depends on how long the employee had been unemployed. For example, a higher percentage of the standard life cover is payable if death occurs closer to the last date of employment, with the amount reducing over time.

What does ELC’s death in incapacity cover?

ELC’s death in incapacity applies when an employee leaves work due to long-term illness or
injury and later dies.

A benefit may be payable if:

• The employee was under State Pension age at the date of death.
• Death occurred within three years of the last ELC contribution being paid.
• The employee remained continuously incapacitated and unable to work.
• They had at least one year of continuous ELC membership.

As with death in unemployment, the amount paid reduces over time depending on how long the employee had been absent from work due to incapacity.

Why does ELC matter to employers and employees?

For employees and their families, ELC can provide vital financial support at an extremely difficult time, even after employment has ended.

For employers, offering ELC with these protections:

• Demonstrates a genuine commitment to employee wellbeing.
• Helps build trust and reassurance within your workforce.
• Supports fair treatment by offering continuity of protection during vulnerable periods.

The State Pension age rule explained

It’s important to be aware that while ELC has no upper age limit, death in unemployment and death in incapacity cover stops once an employee reaches State Pension age.

This means:

• If an employee dies after reaching State Pension age, no benefit is payable under these two elements.
• Death while still employed remains covered regardless of age.
• Making this clear helps you communicate accurately with employees and avoid misunderstandings.

Getting it right

To ensure this cover works as intended, it’s essential that:

• Eligible employees are correctly included on your payment schedule.
• Contributions are kept up to date.
• Employee details remain accurate.

Our Employee Life Cover is designed to be simple, while offering meaningful protection when it’s needed most. Understanding how our cover works during death in unemployment and death in incapacity helps you make informed decisions and support your workforce with confidence.

We’re here to help

If you have any further question with regards to your cover, please contact us at: EAC.ELC@bandce.co.uk.