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.
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.
Employee Benefits Consultant at Drewberry
Frequently Asked Employee Benefits Questions
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!
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!
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.