Death in service insurance

Compare quotes for death in service cover with our preferred provider ProtectMyPeople[1]

Get quotes

What’s death in service cover and how does it work?

Death in service insurance cover – also known as group life assurance – is a type of life insurance. It pays out a tax-free sum of money to your employee’s chosen beneficiaries when they die. It’s often offered as a company benefit.

The death doesn’t have to be work-related; the staff member just needs to be on your payroll.

Death in service cover can sometimes be linked to your company’s pension scheme. If it is, your employees will need to be enrolled in the company pension to benefit.

It’s not a replacement for life insurance, but it could offer your staff some peace of mind. From your employees’ perspective, how much your company’s death in service benefit pays out will determine whether it’s worth them investing in individual life insurance policies to fully cover their needs.

death in service

Most death in service benefits pay out two to four times an annual salary.

For example, if an employee earned £20,000 a year, their beneficiaries could get a tax-free sum between £40,000 to £80,000

Pros and cons of death in service benefit

Pros:

  • The payout is tax free
  • It’s usually free to employees as a staff benefit
  • Gives employees peace of mind
  • Could help with staff recruitment as an extra incentive

Cons:

  • The payout isn’t as large as with individual life insurance
  • Must be a company employee to benefit
  • It might be tied to the company’s pension scheme
  • Employees don’t have control over the policy details

Some companies offer death in service cover as part of their employee package

This pays a tax free lump sum to your named beneficiary, but it’s not a replacement for life insurance.

Check the level of cover as policies can pay from three to five times your salary, and you may want to consider life insurance too, where you can set payments and payouts.

Remember any death in service cover will end if you change jobs and move to another company.
Sue Hayward, Personal Finance & Consumer Journalist, Broadcaster & Author

Compare death in service cover

Details you’ll need to hand:

  1. Your contact details, and how you’d like to be contacted

  2. Information about your business – how long you’ve been trading for and how many employees you have, for example

  3. The amount of cover you want to offer, and the maximum age limit that you’ll cover employees to

What happens when employees leave the company?

Death in service will only pay out for current employees of the business. It's rare for an individual to be able to take their policy to a new employer. That's why additional life insurance might be worthwhile for some of your employees. 

Can employees have more than one life insurance policy?

Unlike other types of insurance, where having more than one policy can cause problems when you want to claim, with life insurance you can have multiple policies. Each will pay out if the policy conditions are met.

Life insurance calculator

Use our calculator to get an idea of how much life insurance might be right for you

Try our calculator now >

Frequently asked questions

That’s up to them.

Insurers usually recommend having enough cover for six to 10 times an annual salary, so it could be worth your employees' taking out an individual life policy too.

Usually within 30 days of the insured’s death. If the claim is straightforward and all the right documents are presented, it could be paid out within just 10 to 14 days. 

No. It’s tax-free because the policy is kept in trust by the company and isn’t subject to inheritance tax. It doesn’t need to be entered on a P11D form.

Death in service premiums are classed as a business expense so your business would benefit from corporation tax relief.

It’s not specifically for covering a mortgage. It’s up to the beneficiaries what they do with the payout.

Load more

Life insurance guides

All guides

[1]We do not offer a full comparison service on death in service cover at Gocompare.com but instead introduce you to ProtectMyPeople to provide quotes. Please remember, as different companies offer different policies, it is up to you to choose the one that best suits your needs. ProtectMyPeople is a trading name of Investment Discounts Online Ltd and is part of the Legal & General Group. Investment Discounts Online Ltd are authorised and regulated by the Financial Conduct Authority. Gocompare.com's relationship with ProtectMyPeople is limited to that of a business partnership, no common ownership or control rights exist between us