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You have death in service at work. Do you still need life insurance?

Sometimes it is enough. Often it is not, and the reasons it falls short are the same three every time. This is how to check rather than assume.

4 min read

It stops the day you leave

Death in service is a benefit of your employment, not a policy you own. Change jobs, be made redundant, or retire, and it goes with the job.

That matters because the cover you most need is usually tied to a mortgage that runs for twenty-five years, and very few people stay with one employer for twenty-five years.

It is a multiple of salary, not a calculation of your needs

Schemes commonly pay a multiple of basic salary. That figure was chosen by whoever set the scheme up, not by reference to your mortgage, your children's ages or what your household actually costs to run.

It is worth doing the arithmetic once. Take what your family would need to clear the mortgage, then what they would need to keep the household going, and compare it to the multiple. Sometimes there is no gap at all. Often there is a substantial one.

It usually ignores bonus, commission and dividends

If a meaningful part of your income is variable, or you are a director drawing dividends, the scheme is very likely covering only the basic salary element. The rest of your income simply is not in the calculation.

What to do about it

Find out the multiple and whether it is based on basic salary alone. Then work out what clearing the mortgage would take, and what replacing your income would take beyond that.

If there is a gap, a personal policy fills it and stays with you when you change employer. If there is not, you should be told so, and we will tell you so.

The short versionDeath in service is worth having and rarely worth relying on alone. It takes about fifteen minutes to establish whether you have a gap.
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