Death in service insurance is similar to life insurance, set up by an individual, in that it pays out a lump sum if someone dies, but differs in that the policy is provided by an employer.
The amount paid is usually a multiple of an employee’s base salary and death in service insurance is considered a valuable employee benefit.
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Death in service may be offered by companies as part of an employee’s benefits package. It is paid out as a tax-free lump sum to the beneficiary of the employee at the time of their death.
An employer would usually require the employee to nominate the beneficiary.
Benefits are normally based on the employee’s earnings and can be tailored to meet the employer’s specific needs and those of their staff.
It is very important that employees do not consider their death in service policy as a replacement for their own life insurance. Individuals should evaluate what they may need to cover any mortgage payments and standards of living and ensure that they have a top-up insurance policy or their own life insurance policy if they so need.
Death-in-service is a benefit which pays out a tax-free lump sum to an individual if they are employed by the company at the time of their death. The pay out is usually based as a multiple of an employee’s salary.
Assuming claims are straightforward and paperwork is all in place payments should take no longer than 10-14 days. Most payments are settled within 30 days.
No. There are no obligations on a company providing death in service insurance to their employees, but it is worth considering as it is regarded as a valuable employee benefit and can help with recruiting and retaining staff.
As the Coronavirus pandemic continues to dominate headlines, our Group Protection teams have been busy understanding the implications of the virus on the protection markets and what businesses need to consider for their scheme members.