Death In Service Insurance

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Why Death in Service Insurance?


A Death In Service benefit pays a cash lump sum benefit should an employee die whilst in employment with your organisation.


Central to any good employee benefits package, it provides peace of mind for your employees and their families by providing a cash lump sum should the worst happen.


Additional benefits often include an Employee Assistance Program ❤ and Bereavement Service.


1 in 9 persons aged 20 years now will not live to reach their retirement at age 65. ONS Life Expectancy Data 2012-14

What is it for?

What does Group Death Insurance cover?

Protecting your employees…

A Death In Service benefit is a very simple life insurance policy paying out if the worker passes away whilst in employment with your organisation.

A Death In Service policy would pay out irrespective of whether death occurs at work or not. For example, it could be as a result of an accident whilst on holiday or as a result of a long-term serious illness.

Each employee is covered for a multiple of their gross earnings which is determined by the business upon setting up the policy. The structure of Death In Service policies is inherently flexible, allowing different grades of employees to have different levels of cover usually ranging from 2 – 15 x gross salary.

What does it cover?

How Does Death in Service Work?

Stage 1:
An employee dies during their tenure with your company

Stage 2:
The business assists the employee’s family in making a claim with the insurer

Stage 3:
The insurer pays out the sum assured into trust (thus avoiding inheritance tax on Death in Service cover)

Stage 4:
The business (as the ‘trustee’) pays the funds from the trust to the employee’s family.

How does it work?

Your Policy Options

Level of cover

The level of cover is usually set as a multiple of basic salary before tax, although fluctuating remuneration can be compensated for with some insurers, such as where directors are paid largely in dividends rather than a salary.

Length of cover

Although reviewable annually, the policy can pay out at any point up to a certain age, which is usually set in line with the company’s retirement age.

Important! Death In Service schemes typically used to run until age 65, but with the removal of the fixed state pension age plans should now run until ‘age 65 or State Pension Age’, whichever is later.

Key policy options

Our Delivery...

Being independent insurance advisers we pride ourselves on being the experts, knowing every insurance product we offer inside out and back to front. Here’s how we work…

The Fact Find:
We will talk you through the options available and capture vital information about the employees to be covered.

The Research:
We go out to all top Death in Service providers to gain the most competitive options available.

The Report:
We email you a short report with pricing and insurer recommendations for the various options we’ve discussed. When you are happy to go ahead in many cases we are able to complete the application for you over the phone.

How can we help?
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This Guide

Tom Conner - Director
Written by:
Tom Conner, BSc, MPhil
Director at Drewberry
Last Updated
3 August 2018
⏰  10 min read

What is Death in Service?

A Death in Service policy is an employee benefit which is paid for by the company for the benefit of the employees.

It protects your employees if they were to die while in service with your organisation. Should this happen, a cash lump sum is paid on death to help the employee’s loved ones financially at a very difficult time.

The typical sum paid out is between two and four times an employee’s gross salary, although it’s possible to cover up to 15 times salary if required.

For directors who are remunerated largely in dividends rather than salary, it’s possible to cover them for a fixed amount rather than a multiple of salary.

It is also commonly known as Group Life Assurance and is an increasingly popular ‘first step’ on the ladder of employee benefits as it’s among the cheapest benefits to offer while still providing valuable peace of mind for your workers and their loved ones.

Very easy to deal with. Adviser was knowledgeable and clear about options. It was a pleasure to use this broker and I would happily recommend to others.

Jocelyn Griffith
How does employee life insurance work?

How Death in Service Cover Works

  • Pays out a lump sum benefit of a multiple of an employee’s salary should they pass away during employment at the organisation.
  • The payout is completely tax-free for the employee’s family thanks to the fact that the policy will automatically be written into trust from the outset.
  • This trust is owned and controlled by the company, as is the policy, and the company also pays for it.
  • However, the payout belongs to the employee’s family and is paid to them via a trust in the event of the death of the employee.
  • As well as choosing the benefit – either a multiple of salary or on a flat rate basis – the employer gets to choose how long the benefit will be payable for.
  • You may choose to opt to create tiers of cover depending on the seniority of your workforce. Some businesses choose to offer senior staff a higher multiple of salary than more junior members, for example.

Death in Service vs Personal Life Insurance

  • The main difference between a Death in Service benefit and Life Insurance is who pays for it. With Life Insurance, it’s paid for personally, from your bank account. For Group Life Insurance, the cover is paid for by the company.
  • You only receive employee Life insurance for as long as you’re working at the company – if you move jobs, your cover lapses. Individual Life Insurance, on the other hand, remains in place for the full term unless you stop paying the premiums.
  • Your employer typically decides how much Group Life Insurance you will receive, which is usually a multiple of your salary. You’re free to choose how much life cover you want on an individual basis.
  • Read more on the difference between Group Life Insurance and Personal Life Insurance here >>

Setting Up Death in Service Policy

To set up a Death in Service policy, you’ll need to collect detailed information from each employee and present these to every single insurer to compare the UK’s best Death in Service quotes. To get a fair premium representative of the whole market, we recommend you visit at least three employee benefits providers.

Get your HR team to collect:

  • Employees’ salaries and the level of cover – we need this to work out how much you want to insure each individual for and therefore price the policy accordingly.
  • Your industry and occupation – there are some occupations (e.g. manual work, working at heights or underwater) that are riskier than others, such as desk-based clerical jobs.
  • Employees’ ages – older employees are more likely to claim on the policy.
  • Age at which you want the cover to finish – the older this is set at, the more expensive premiums will be.
  • The size of the group – although there are more lives to insure the bigger the group, insurers sometimes offer a discount for larger group sizes.
  • Where employees are usually based for work.
  • If employees are actively at work currently – those off on long-term sickness at the policy’s inception are unlikely to be covered.
nadeem farid, employee benefits expert at drewberry

When you set up a policy, you’ll need to collect all this information and send it to every insurer in the marketplace if you want to get the best premiums.

Alternatively, you can just send this data to Drewberry once. We have relationships with all the leading insurers and have created smooth processes to go to the market on your behalf to obtain the best quotes for you. We then present these in an easily-digestible report for free – it’s all part of the service.

Nadeem Farid, Cert CII
Employee Benefits Expert at Drewberry

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Income Protection
UK Death in Service Benefits

Death in Service Benefits

Although it’s employees who get covered with Death in Service Insurance, there are benefits for both workers and employers alike.


Benefits for Employers

According to Investors in People…

  • Almost 1 in 5 UK employees are unhappy in their job due to a lack of benefits.
  • 44% of UK employees considered company benefits to be one of the most important qualities that attract them to a new company.

Meanwhile, the Chartered Institute of Professional Development reveals that 54% of people currently looking for a new job are looking for better pay/benefits, citing this as the main reason for their move.

Employee benefits can help attract and retain employees, improve employee engagement and even reduce absenteeism, especially when the cover comes with employee assistance programs (EAPs).

There are also tax advantages to offering Death in Service cover in the form of corporation tax relief on premiums.


Benefits for Employees

Life Insurance is a popular benefit for workers. However, a recent Drewberry survey finding that only around 1 in 3 UK adults had Life Insurance. Cost is a major barrier to uptake, so having an employer pay for cover could be a major weight off many employees’ shoulders.

Benefits of death in service cover

Workers with pre-existing medical conditions could also benefit from a Death in Service policy, as such policies aren’t usually medically underwritten unless you exceed the free cover limit.

This means any current medical conditions that could lead to adverse terms on an individual policy, such as diabetes, won’t be taken into account for the vast majority of employees covered by employee Life Insurance.

Furthermore, Death In Service policies are written into trust from the outset. The employer is the trustee, who then pays the benefit to the employee’s family should the employee pass away.

As a result of this setup, the benefit is automatically paid free from inheritance tax, whereas in an individual policy there is an additional step to write the policy into trust to ensure this.

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eligibility for life insurance scheme for employees

Can We Get a Death in Service Insurance Scheme?

The main barrier to entry for a Death in Service benefit is a minimum number of employees. Most providers require at least five employees for you to get cover, but some will accept as few as two employees.

Other stipulations include:

  • Staff to be covered must be within the minimum and maximum entry ages of the policy.
  • All staff must be eligible to work in the UK and have a UK working contract (although they can work abroad, providing their contract is UK-based).
  • Staff must be an active employee at the company providing the insurance scheme.

In addition to the minimum terms imposed by the provider, some companies choose to add their own conditions. These include putting in place a minimum time period an employee must spend at the company before being granted cover, or the cover only being provided to those with a stated seniority (e.g. managers only).


Small Business Life Insurance

If your business is too small for a full Death in Service benefit, you may want to consider a product called Relevant Life Insurance. This is also known as Contractor Life Insurance because it’s frequently taken out by contractors working through their own limited companies and where they’re the only employee.

However, Relevant Life Insurance can be taken out for more than a single employee. There are similar tax benefits to a Death in Service scheme in that the policy is owned and paid for by the business and there is corporation tax relief available on premiums.

With Relevant Life Insurance, however, each member will need to be medically underwritten from scratch and in many ways it’s closer to an individual Life Insurance policy than it is a full Death in Service scheme.

Still, it offers the same level of cover and is still company-funded, so Relevant Life Insurance is often used as an ‘in-between’ option for smaller companies without enough staff for an employee benefits package.

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Expert Death in Service Insurance Guides

Related Death in Service Guides...

How is a Death in Service Policy Taxed?

Relevant Life Insurance could save Company Directors 50% on premiums!

Are Death In Service Benefits Compulsory?

how much does death in service cost?

How Much Does Death in Service Insurance Cost?

The cost of Death in Service Cover, like any group insurance scheme, will depend largely on the demographics of your workers.

Although there’s usually no need for medical underwriting, cost will still depend on the age of the workforce, for example. An older workforce will typically increase premiums due to increased risk. Other major factors that will determine the cost of Group Life Cover include:

  • Employees’ salaries – given that the benefit is based on a multiple of salary. If you have many high-earning employees, you’ll likely face a higher premium
  • Your industry – certain industries require employees to take on risker roles (e.g. manual work, working at heights or underwater) than would be undertaken by the typical desk worker, so premiums will be higher in such industries
  • Number of workers – while you might think that it would cost more to insure a larger group of people, in fact certain cases insurers will offer a premium discount for groups above a certain size.
emma wilson employee benefits expert

Given that the price of Death in Service Insurance is based so heavily on the makeup of your workforce, it’s essential we collect the relevant information before we start.

While clients are sometimes rightly concerned about handing over confidential employee data, we can’t do our job to secure you the best premiums without it. We treat your data with the utmost respect and fully comply with the new GDPR regulations, so you’ll never find it’s been leaked to third parties.

Emma Wilson
Employee Benefits Expert at Drewberry


How is Death in Service Insurance Taxed?

Life Insurance for employees is paid for by the company and the premiums are generally an allowable business expense for corporation tax purposes. It’s also not a P11D or a Benefit in Kind for employees – which means there won’t be any additional income tax you’ll have to pay as a result of being covered by your employer.

This is compared to an individual policy, where you pay for premiums out of income on which you’ve already had tax and National Insurance deducted. Plus, you’re paying for cover out of your own pocket rather than having the company cover the costs.

inheritance tax death in service

Inheritance Tax and Death in Service

The way Death in Service Cover is set up typically includes a trust from the outset. This trust is owned by the company and the Life Insurance is written into that trust.

As a result, in the event of a claim, the money is paid first into the trust before being distributed to beneficiaries. This intermediary step between the death of the employee and their loved ones receiving the benefit allows the bereaved family to sidestep any inheritance tax issues on the payment.

Given that these policies usually come with corporation tax relief on premiums and the payout, thanks to the trust, isn’t taxable either, its one of the most tax-efficient options for life cover on the market today.

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Best UK Death in Service Providers

6 Best Employee Benefits Providers – Death in Service



Aviva can trace its roots back to 1696, but the company as it is known today was formed via the 2000 merger of Norwich Union ad CGU PLC.

Aviva Death in Service Cover allows employees who are part of the scheme to add a spouse/partner to the policy. The employee assistance program on offer includes discounted gym memberships and access to a 24-hour stress counselling helpline.

  • Free cover level: £5 million
  • Minimum lives: 5
  • Max. policy cease age: 75
Canada Life

Canada Life

Canada Life paid 99.7% of Group Life claims in 2016. The Canadian company offers life, health and disability insurances for both groups and individuals.

With Canada Life employees’ families are provided access to bereavement and probate helplines after the death of their loved one.

  • Free cover level: £1.25 million
  • Minimum lives: 5
  • Max. policy cease age: 75

Ellipse was founded in 2009. Despite being a relatively new provider, it has since grown to insure more than 250,000 lives.

Ellipse’s Death In Service benefits include an online nomination of beneficiary form and online medical underwriting, which can help speed up the application process.

  • Free cover level: £1.25 million
  • Minimum lives: 2
  • Max. policy cease age: 75
legal & general

Legal & General was founded in 1836 and is one of the oldest and most recognisable insurance brands in the UK. In 2016, the insurer paid 97% of all group claims.

With Legal & General workers get access to a substantial employee assistance program.

  • Free cover level: £5 million
  • Minimum lives: 10
  • Max. policy cease age: 75


MetLife is the trading name of New York-based business The Metropolitan Life Insurance Company. It’s among the largest providers of insurance, annuities and employee benefits programs worldwide.

MetLife’s group life cover comes with a free bereavement and probate support for employees and their families, making up to six face-to-face bereavement counselling sessions available.

  • Free cover level: Determined by underwriting
  • Minimum lives: 2 members for policies with Flexible Benefits; 3 members for policies without Flexible Benefits
  • Max. policy cease age: 75


The Unum Group was formed in 1999 through the merger of Unum Corporation and The Provident Companies. Today, the company operates through three distinct business arms: Unum US, Colonial Life and it’s UK branch, Unum UK.

Unum offers a multiple of between 1x and 12x salary with one of the highest free cover limits on the market.

  • Free cover level: £15 million
  • Minimum lives: 20
  • Max. policy cease age: 75

How to Get the Best Death in Service Benefit

There’s no real ‘trick’ to getting the best cover – it all involves studying the market and comparing premiums to make sure you find the best option for you. You’ll also need to consider the additional benefits on offer from the providers, such as counselling services, and factor this into your decision.

Key things to look out for…

  • Successful claims
  • Reputation of provider
  • Clarity of policy wording
  • Additional benefits
  • Whether there’s a limit on the cover/number of people you can put on a policy.

Remember, when comparing Death in Service…

  • Higher premiums don’t always mean better cover
  • Always compare the entire market, look for other options and don’t take the first quote
  • Be accurate with all information you provide – if you’re not sure if something is relevant, ask an expert.
Nadeem farid, employee benefits expert at drewberry

Of course, the easiest way to compare Death in Service quotes is to ask an expert, such as one of the expert Employee Benefits Experts at Drewberry.

We’ll go to all the providers on your behalf and compare quotes from across the UK market before presenting our findings in an easy-to-understand report. If you need help please don’t hesitate to pop us a call on 📞 02074425880 or email

Nadeem Farid
Employee Benefits Expert at Drewberry


What is the Free Cover Limit?

The free cover limit is the amount of Life Insurance that can be secured on an individual worker before medical underwriting is required. These limits are typically set high, so for most people being offered two to four times their salary they won’t have to submit any medical details to support their application.

Effectively, this can help get cover for those with pre-existing conditions or other factors that would likely increase Life Insurance premiums as an individual, such as being a smoker, on the same terms as a healthy individual. Individuals would likely struggle to get such favourable terms on the personal market, where applications are always underwritten.

For those who exceed the free cover limit, their applications will have to be medically underwritten. However, thanks to high free cover limits for Death in Service Cover, it’s usually only managers and directors with large salaries and therefore large benefits who need to be concerned with this.


Additional Benefits and Employee Assistance Programs

It is important to highlight that some insurers offer additional benefits with their products, which may not seem obvious when initially looking to invest in a Death in Service benefit.

These include:

  • Counselling and bereavement services, either face-to-face or over the phone, for employees’ loved ones
  • Telephone-based GP and nurse services
  • Access to physiotherapy and other benefits to help employees back to work if they’re off sick.
Emma Wilson, employee benefits expert at drewberry

When it comes to comparing Death in Service Insurance, it’s not just about looking at factors such as price and the free cover limit. You’ve also got to consider any employee assistance programs that come with the cover and work out how much value these will add to your business.

The free reports we produce on the various insurance options available to you will include a comparison of additional benefits so you can see how these might work for you.

Emma Wilson
Employee Benefits Expert at Drewberry

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Get Expert Death in Service Advice

Emma Wilson, employee benefits expert at drewberry, offers death in service insurance advice

It can be difficult and time-consuming for an individual to get quotes from every UK provider. However, it’s important that you do so to get the best premium.

Rather than doing all of this work yourself and potentially coming up against providers who only deal with intermediaries, why not let us help? We’ll do all the hard work for you, just pop us a call on 02074425880.

Emma Wilson
Employee Benefits Expert at Drewberry


Why Work With Drewberry™?

  • We placed over £1 billion worth of risk with insurers for our clients in 2017
  • We were nominated for Protection Intermediary of the Year at the Protection Review Awards in 2016, 2017 and 2018 and the Cover Excellence Awards in 2016 and 2017
  • Our ethos is to provide the best possible service demonstrated by the growing number of 5-star rated reviews with 98% of our clients saying they would recommend us
  • Rob and the rest of our insurance experts are frequently quoted in leading papers such as The Independent and Financial Times with a reputation in the media as an authority in our industry.

Read more about Drewberry here >>

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