What is death in service benefit?
Death in service benefit ensures a lump sum of money can be paid to your nominated beneficiaries if you die whilst employed by a company. It usually forms part of an employee benefits package that can also include income protection insurance, critical illness cover and health insurance.
How much does death in service benefit pay out?
The amount of money that your death in service insurance pays out is decided by your employer and is usually a multiple of your gross annual salary (your annual salary before tax is deducted). It can be anywhere between 1 and 20 times your gross annual salary but most employers offer a benefit of between 2 to 4 times your gross salary.
Who will my death in service benefit be paid to if I die?
A nomination form allows you to name one or more beneficiaries and how you wish for the benefit to be split between them.
Death in service benefit vs life insurance
|Death in service benefit||Life insurance|
|Who pays the premium?||Employer||You|
|Who decides on the amount of cover?||Employer||You|
|Application form and health assessment required?||No||Yes|
|How is the benefit paid?||Lump sum if you die||Lump sum or income if you die|
|When does the policy terminate?||When you leave your employer or your employer withdraws the benefit||When the policy term is reached or if you stop paying the premiums|
How to work out what life insurance you need
Working out how much life cover you need and how best to arrange this without paying over the odds is simple. A life insurance expert* is free to consult and will guide you to what you need and factor in any death in service payouts you might get. They will ensure any payouts are tax-efficient and sufficient to cover your needs.
The experts search the whole market for the best life insurance at the cheapest price and as a Money to the Masses reader, you'll get up to £100 cashback if you buy your life cover this way.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. This link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article