Group Death in Service – What is it and how does it work?
A Death-in-Service benefit is one of the most valuable ‘work perks’ you can offer. That’s because it’s a type of group insurance policy paid by you, as an employer, and one which can look after your employee’s family or loved ones should they die.
How does it work if you’re an employer?
Offering a Death-in-Service benefit can attract new talent, incentivise employees in their work, and provide them with peace of mind. Imagine that a new or current employee has a family that relies on them completely, or partially, to provide their brood with a roof over their head and food on the table. The pay out from Death-in-Service benefit can give their family and/or loved ones much-needed financial support should you pass away.
In fact, a Death-in-Service benefit is one of the top three benefits employees look for in a company, and it’s the most valued work benefit after Private Medical Insurance1. But despite the popularity of this type of work benefit only 13.7% of small businesses offer it to their employees despite this type of employee benefit being relatively inexpensive2.
How much does Death-in-Service benefit cost?
The average cost of a £100,000 Death-in-Service benefit is around £100 a year for each employee. If you have for example, a small business with seven employees, the cost per year would be between £700 and £1,0003. Not a huge outgoing, in return for the following:
- Recruiting and retaining talent in a job market that is stacked in favour of jobseekers
- Providing help for your employees and their families
- Potentially giving your employees peace of mind
Death-in-Service benefit – the details
Death-in-Service benefit usually pays out twice to four times the yearly salary of your employee4. The person receiving this type of benefit can name the people they’d like to receive the tax-free lump sum when they are initially set up with it.
They won’t have to disclose information about their health and lifestyle because Death-in Service benefits aren’t underwritten by the insurer – unlike life insurance policies. Generally, insurers figure out premiums for Death-in-Service benefit by taking the whole workforce into account instead of basing it on individuals.
Death-in-Service benefit can be used similarly to a life insurance policy – to cover mortgage payments and living expenses – should your employee die. Unlike life insurance though, they can’t state or specify that the Death-in-Service benefit is used to pay off their mortgage, but the people who receive the lump sum could put it towards a mortgage, for example.
As an employer, if you’d like to talk to us about providing Death-in-Service benefit to your employees – how much it costs, and how to set it up for your employees – talk to us.
If you already have a Death-in-Benefit scheme in place, it’s important to review it annually. Our Independent Financial Advisers would be happy to review your current scheme free of charge to see whether we can find you a cheaper or more effective alternative.
Book an appointment
Book hereSpeak to our team
Call now: 01823 250750Alternatively, email:
info@lloydwhyte.com
What matters to you, matters to us
1-3. https://smallbusiness.co.uk/how-offering-a-death-in-service-benefit-can-save-you-money-2548679/
Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Calls may be recorded for use in quality management, training and customer support.
