Life insurance
Death in service: how far work life cover goes
Many employers pay a lump sum, usually a multiple of salary, if you die while you work for them. Enter yours and the cover your family would need.
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Death in service and the gap it leaves
Example, not your result yet· change a figure to see yours
Death in service lump sum
£152,000
| Gap to the need | £148,000 |
| If you leave this job | £0 |
| Share of the need covered | 51% |
Paid only while you work for this employer, at the multiple the scheme sets.
Death in service is life cover provided through an employer, usually as part of its pension scheme or a group life policy. If an employee dies while employed, the scheme pays a lump sum, most often a multiple of salary, to the family or to whoever the trustees choose. On a salary of £38,000, a four times multiple pays £152,000. Against a family need of £300,000, which covers a mortgage, some years of income and the children’s costs, that leaves a gap of £148,000. The benefit costs the employee nothing directly, but it has two limits that a personal policy does not. It ends the day the job ends, whether through a new job, redundancy, a career break or retirement. And the amount moves with salary and with the scheme’s rules, which the employer can change.
Rates read and sums checked by Radif Partners · Editorial policy · How the figures are worked out
Common multiples against one family’s need
Each employer sets its own multiple, and it is printed in the scheme booklet. The table sets each one against a need of £300,000 for an employee on £38,000.
| Multiple | Lump sum | Gap left | Share of the need covered |
|---|---|---|---|
| 1 × salary | £38,000 | £262,000 | 13% |
| 2 × salary | £76,000 | £224,000 | 25% |
| 3 × salary | £114,000 | £186,000 | 38% |
| 4 × salary | £152,000 | £148,000 | 51% |
The same family, with and without the job
Put a family through the life cover calculator: a married parent with a child at home, £160,000 left on the mortgage, £20,000 a year of income needed for twelve years and £10,000 of savings. With death in service of four times salary, and Bereavement Support Payment counted, the cover still needed is £248,200. If the same parent leaves the job, or the new employer offers no death in service, the need jumps to £400,200. A personal policy priced at today’s age and health is cheaper than the same policy bought after a gap, so some people buy enough personal cover to bridge a job change rather than relying on the next employer.
What death in service usually is, and is not
It is normally a lump sum, sometimes with a spouse’s or dependant’s pension on top in a defined benefit scheme. It is not income protection: if you are alive but cannot work, death in service pays nothing. And it is not an asset you own. Benefits paid at the trustees’ discretion are usually outside your estate; a lump sum paid to the estate would be counted in it, as GOV.UK’s guide to valuing an estate shows for any payment made on death.
Checking your own cover
The figure is in the scheme booklet, the benefits portal or the annual benefit statement. Three things are worth noting at the same time: the multiple, whether it is of basic salary or of total pay including bonuses, and whether the cover stops at a set age. For most people the odds of the benefit ever being paid are low, as the ONS life tables show, but the families who do rely on it rely on it entirely.
Changing jobs with a family to protect
Before leaving a job, it helps to check whether the new employer offers death in service, from what date and at what multiple; some schemes start only after a probation period. The weeks between the two jobs are covered by neither. A personal term policy taken out while still employed, sized on the gap the calculator shows without the work benefit, removes that risk for the length of the term. It also keeps cover in place through a career break or redundancy, which is when a family is least able to absorb a loss.