Death In Service

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What is a death in service benefit?

Many employers offer their employees ‘death in service’ cover. This life insurance pays out a tax free lump sum to your beneficiaries if the employee dies whilst they are employed. The employee does not have to be at work for the policy to pay out.

Death in service benefit is often linked to a company pension scheme, so you may have to be a member of the scheme to qualify for a payment, another benefit to signing up for the pension plan.

Check to see if death in service cover makes up part of your benefits package.


What does death in service cover include?

You are only covered by a company death in service policy if you are employed at the time of your death. If you change jobs, take a career break or become self-employed, you will not be covered. It’s therefore important to ensure you have adequate life insurance cover for any dependants.

A death in service payout may not be enough to cover your financial needs – such as a mortgage –  in the event of your death. That’s a harrowing thought. You obviously don’t want to leave your family with an expensive mortgage or debts they can’t afford to pay, so you may need to take out an additional life insurance policy.

If you wish to link your life insurance policy to your mortgage or you wish to specify who receives a life insurance payout, it’s advisable to take out a separate life insurance policy. A death in service benefit payment cannot be assigned directly to a mortgage.


Who benefits from a death in service cover payment?

You can’t predict the future, and it can be difficult to imagine what the initial and continuing effects of loss might have on your family. The benefits from a death in service cover payment can let you lessen the financial impact as much as possible, securing positive steps to protect your family.