Group critical illness cover is a policy an employer takes out to pay a lump sum, normally tax-free, to an employee who is diagnosed with a covered illness, or has a covered operation, while they work there. Because the employer holds the policy, the tax follows the employer's arrangement: insurers describe the premium as usually deductible for the employer and usually a benefit in kind for the employee.

A broker authorised by the FCA can check how a policy of your own would sit beside whatever your employer provides. It costs nothing to submit the request here.

What is group critical illness cover through an employer?

One policy covers a defined group of employees. Aviva's technical guide for the policy (GR03004, February 2026), written for employers and advisers, says it is "intended for schemes with three or more members". The employer chooses the level of benefit, such as a multiple of salary, and the guide sets a maximum of five times salary, "up to a maximum of £500,000 per claim for an employee". Claims go through the employer, who makes them on the member's behalf. Which illnesses are covered, and to what definition, is set out in the scheme's documents; how a personal policy defines them is in our guide to critical illness cover, and the conditions lists are on conditions covered.

Aviva's product page for employers (read 20 October 2026) says joining involves no medical questions or checks, while pre-existing conditions, and anything related to them, are excluded. Cover that ends up depending on a scheme you did not choose is one reason people ask whether it is enough on its own, which is critical illness cover worth it takes up. For how a policy's price is built, see critical illness insurance cost.

Group critical illness is a different product from group life, which pays on death: that is on group life assurance cover. Company-paid life cover for a single employee is another arrangement again, explained in relevant life insurance.

How do core and voluntary schemes differ?

The insurer documents describe two broad shapes, and the labels vary by insurer.

ShapeWhat the insurer's document says
Employer-funded schemeAviva's guide says the employer normally pays the whole premium and that membership "must be compulsory for all eligible employees within a defined category or categories". Aviva's pros-and-cons page (15 December 2025) adds that an employer can instead ask employees to pay part of the premium.
Voluntary schemeLegal & General's voluntary technical guide (W9429, April 2026) describes members paying for their own cover; it suggests the employer may take the premiums through payroll. For a new voluntary plan that is not currently insured, it says it "usually" requires a minimum potential membership of 2,500.

Legal & General's two guides, like Aviva's, are technical guides for employers and their advisers, not consumer leaflets: they describe what the product is designed to do, and your own scheme's schedule has the terms that apply to you. Whether your employer's scheme is fully funded, shared or voluntary decides who bears the premium, and so which tax rules below apply to you. The scheme booklet or HR team can say which it is.

What happens to group critical illness cover if you leave?

Aviva's guide lists when cover stops for an employee, including when they are no longer employed by the employer and, for the policy as a whole, when it is cancelled or premiums are not paid. It states: "There's no continuation option available for members or children who are no longer eligible for your policy." Partners' and children's cover also stops "if the employee leaves the policy, for whatever reason".

Legal & General's employer-funded guide asks whether employees can continue their cover if they leave, and answers: "No, an insured person cannot continue cover at their own expense if the insured employee stops working for you." Its voluntary guide gives the same answer for a member who stops working for the employer. A scheme from another insurer, such as Canada Life, Unum, Zurich or AIG, may set different terms on leaving, so the question to put to your employer is whether the policy has any continuation or conversion option.

Because cover ends with the job, a new employer's scheme and a personal policy are separate routes; what an individual policy involves is in can you buy critical illness cover on its own, and critical illness cover for the self-employed covers people with no employer scheme. Cover that stays with you after a job change is something to raise with a broker; the form on this page starts that conversation, free of charge.

How is the premium taxed for the employer?

What follows is what the insurers and HMRC publish; the rules can change, and a company's accountant confirms how they apply.

Aviva's guide, which presents its tax notes as its understanding of current law and practice, says that where an employer pays the whole premium, "HM Revenue and Customs (HMRC) will generally agree to this being allowed as a trading expense and can be offset against Corporation Tax", and that "The employer is liable for Class 1A National Insurance Contributions on the premiums." Legal & General's guide, on the same understanding-of-current-rules basis, says premiums paid for employees "are tax-deductible and can be offset against your profits for tax purposes".

Those statements name group critical illness; the HMRC Business Income Manual page on insuring employees and other key persons (dated 1 April 2016) does not. It says that where an employer takes out a policy "to provide against an obligation to pay compensation on the death etc of employees", the premiums are allowable because they are "not capital expenditure" and are incurred wholly and exclusively for the trade, but that critical illness or accident policies "with an investment content" are capital expenditure and not deductible. For policies in employees' names or on their behalf, the same page points to its pension scheme guidance rather than answering there. Key person cover, where the employer is the beneficiary, is a different arrangement: see what key person insurance is for.

The same Aviva guide says HMRC "doesn't normally grant tax relief on premiums paid for any employees with a proprietary interest in the company", though it may where a substantial number of other employees have similar benefits. Both insurers say an equity partner who pays for their own cover gets no relief on that premium. How a company treats a director's cover is for its accountant; how executive income protection works covers a related company-paid policy.

How is it taxed for the employee, and is the payout taxable?

Both insurers say an employer-paid premium is, as Aviva's summary puts it, usually a benefit in kind for the employee. Aviva's guide says the premiums "are taxed under the PAYE system", and its pros-and-cons page calls the premium a P11D benefit; Legal & General's guide says employees "will pay tax on the premiums you pay for them", and on a covered spouse or civil partner's premium too. Where an employee pays their own premium through a voluntary scheme, its voluntary guide says "Members will not get tax relief on the premiums they pay."

On the employee side, HMRC's Employment Income Manual speaks to neighbouring kinds of cover. For group medical insurance, its page dated 1 March 2023 says employees and directors are chargeable "on the premiums paid by the employer", which is a rule about medical insurance, not a ruling on critical illness. The Insurance Policyholder Taxation Manual page on employer schemes (dated 1 December 2022) says "The provision of an employer's scheme does not constitute a taxable benefit for the employee unless it is provided under optional remuneration arrangements (OpRA)", but it is about policies an employer holds to fund sick pay, not critical illness lump sums, so it should not be read across. The employer's payroll adviser can say which treatment their scheme follows.

On the payout, both insurers' guides say employees pay no income tax on the lump sum, Aviva's adding that it "is tax free under current tax rules". HMRC's Insurance Policyholder Taxation Manual (page dated 21 April 2022) says a critical illness payment is not an annual payment because it lacks "the quality of recurrence", so it is not taxable as income on that basis. Payouts are treated further in are critical illness payouts taxable, and trusts in critical illness policy in trust. Personal premiums and tax relief are on life insurance tax relief.

Frequently asked questions

Is critical illness cover a benefit in kind?

When an employer pays the premium on a group policy, Aviva and Legal & General both say it is treated as one for the employee (Aviva: "usually"), taxed through PAYE or reported on a P11D. That is the insurers' understanding of current practice rather than wording taken from HMRC, so the scheme's payroll adviser can confirm it.

Are critical illness premiums tax deductible?

For an employer-funded group scheme, Aviva and Legal & General describe the premium as generally deductible for the employer, subject to the points on owner-directors and equity partners above. Premiums an employee pays in a voluntary scheme get no relief, and personal policies are covered in life insurance tax relief.

Is critical illness insurance paid before or after tax?

In Legal & General's voluntary scheme, members get no tax relief on what they pay, so the premium comes out of income that has already been taxed. Your payslip or scheme booklet shows how your own deduction is taken.

Can I keep group critical illness cover if I change job?

Aviva says it has no continuation option for members who are no longer eligible, and Legal & General says an insured person cannot continue at their own expense. Ask your employer whether your scheme's terms differ.

To have cover that does not depend on an employer checked and priced, an adviser firm will phone you back once you submit the form here; it is free. How much cover people weigh up is in how much critical illness cover you need, and the wider topic sits in the critical illness and income guides.

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