Are Death In Service Benefits Compulsory?

I’m in the process of setting up my own business, but have yet to hire any employees. While I know that a pension scheme is compulsory if I hire employees, I’ve been told that a Death in Service benefit is compulsory as well. Is that true?

Question asked by Grace Hersh
Compare Top 10 UK Insurers
FREE Independent & Impartial Advice
Type of Cover
Company Name
Number of Employees

Answered by Alicia Hempsted


Is Death In Service Insurance Compulsory for Employees?

It’s not compulsory to provide Death In Service for your employees if you own your own business. However, there are a lot of reasons for you to consider providing it anyway providing you meet the minimum number of workers – typically three – to make the scheme viable.

An impressive benefit to attract and retain talent

Employee benefits can do wonders when it comes to attracting the right kind of talent for your business and ensuring their stay is long-term.

With so much workplace stress caused by money worries, offering some financial security to employees and their families should the worst happen is a great starter benefit that can help put your business on the map.

Death in Service is inexpensive

In terms of available policies to offer your employees, a Death In Service benefit is one of the cheapest and comes with tax concessions for both employers and employees. Employers aren’t usually required to pay corporation tax on the premiums, while for employees it’s not typically considered a taxable P11D or benefit in kind.

Meanwhile, given that the policy’s payout goes to the employee’s family via a trust owned and controlled by the company, the lump sum benefit also sidesteps inheritance tax.

Offers protection that employees might not be able to get independently

Individual Life Insurance policies are always underwritten, with applicants being asked health questions to determine the cost of their cover. This means that people who are a bit older or perhaps have a shaky medical history might have to pay more for individual cover. This might be something they can’t afford.

With a Death In Service policy, however, the vast majority of employees will be underwritten on a group basis rather than individually, so there’s not usually any need to answer complicated medical questions. This is because Death In Service is based on a generalisation spread across the covered group of employees.

Emma Wilson, Employee Benefits Consultant at Drewberry

There is a whole range of Employee Benefits that you can offer your employees that each come with their own advantages. There are also insurance products that you can purchase for yourself using your business that may offer some tax advantages and save you money on premiums. Consider reading our Directors Insurance guide to learn more about your options.

Emma Wilson
Employee Benefits Consultant at Drewberry

Death in Service
Group Life Insurance
Employee Benefits
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Compare Top 10 UK Business Insurers

Frequently Asked Employee Benefits Questions

We are looking to take out health insurance for our employees but are unsure on if an insurer will provide...
I am researching shareholder protection and wanted to know the purpose of a cross-option agreement and...
I have been doing some research into key man protection and have not come across whether such cover should...
We have taken out a sizeable business loan and I am wondering whether it is mandatory or just best practice...
Need Help? Live chat now and get an instant answer from our Experts...


Our Latest Reviews
Jayant Rampuria

Oliver did an excellent job in making the right recommendations. He's been very patient in dealing with my request and helping me choose the right product. Well done and thanks very much!

James Mclauchlan

Josh did a great job. Did all the legwork for me in getting the best quote and even handed it over to someone else whilst he was away, then finished the whole thing once he was back – impressed!

Raviteja Sajja

Josh was very good at communicating about different options for Life insurance, advising us on right choice and benefits. I would strongly recommend Drewberry. Thank you Josh.

We are rated 4.9/5 based on 1742 independent client reviews.
To read more of our independent client reviews click here →
4.92 / 5 Average
1831 Reviews
A Lovell
Overall Rating
Extremely helpful and able to understand the various issues and constraint
D at Inforcehub
Overall Rating
Very knowledgeable and easy to deal with.
A Kanwal
Overall Rating
Bronja Whitlock was absolutely brilliant, as my mind isn’t in the right place at the moment due to the loss of my partner and I forgot who my insurers were or if I was covered. I therefore contacted her from an old email that I had from a few years just explaining my situation. I wasn’t expecting a response to be honest, but Bronja replied back the same day. She didn’t just reply with the most empathising response, but she also contacted the insurance company and told them of my situation and ordered my claim pack on my behalf, which I can’t appreciate enough. Bronja Whitlock you are an asset to your company. Thank you.
R Sajja
Overall Rating
Josh was very good at communicating about different options for Life insurance, advising us on right choice and benefits. I would strongly recommend Drewberry. Thank you Josh.
Overall Rating
Rauri has been very professional and has responded promptly to any queries. Very friendly nature too