Death in service FAQ

Death in service insurance (also known as group life insurance) is an insurance policy offered as an employee benefit. Its aim is to offer financial support to your employee’s loved ones by providing them with a cash lump-sum payment in the event of their death.

Death in service insurance operates similarly to a personal life insurance policy. If the insured individual passes away, a set amount is paid out.

In the case of death in service insurance, this amount is transferred to a trust. The trustees are then responsible for managing and distributing the funds to the beneficiary. This is typically a spouse, partner, or family member. The trustees consider the preferences of the deceased, as stated in their expression of wish form.

No. Death in service insurance is like life insurance in that both pay out after death, but they are not the same. Death in service insurance is sometimes offered as part of an employee benefits scheme. As an employer, you will select the level of cover for your staff. On the other hand, people can buy life insurance themselves and decide how much coverage they need.

We ask for employee data so the providers on our panel can assess the insurance risk and provide you with quotes for death in service insurance.

The information we ask for is limited to the minimum amount our providers need to return quotes. This is to set prices, decide terms for cover and administer the policy.

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This will depend on several factors. For example, the number of employees you wish to cover, the industry you work in, and the amount of cover you want your employees to have.

If you'd like to get a rough idea of costs, you can use our quick quote calculator.

It won't cost your employees anything as death in service insurance is a staff benefit, provided by you, the employer.

Most of the providers on our panel will quote for three or more employees, although one provider will cover two employees. There is no upper limit on the number of employees you can include in the scheme. Please note, if you have more than 250 staff, getting quotes back from insurance providers will usually take longer.

No, it is not compulsory to offer death in service insurance. However, by offering it, there are a range of benefits which may be available for both employers and employees. You can find out more about these in our “What are the benefits of death in service insurance?” guide.

No, you can choose which employees you would like to include in the scheme. Although, you should consider the Equality Act 2010 into consideration when making the decision on who to include.

This employment law makes it illegal to discriminate against staff on various grounds, such as age and sex.

Yes. For example, you may wish to offer directors a payout of 4x their salary and other employees 2x their salary.

You need to have clear categories of employees to ensure you are not breaching the Equality Act 2010.

This will depend on what level of cover you choose and the insurance provider you select. As a minimum, a lump sum will be paid in the event of their death. The providers on our panel also offer a range of additional wellbeing services. These include bereavement counselling, mental health support and a virtual GP. 

The premiums you pay for a death in service insurance policy are considered a business expense. This means you can deduct them from your profits before tax.

Any payout under a registered death in service insurance policy is tax-free. This means no inheritance tax is paid on it (subject to the individual Lump Sum Allowance (iLSA)).

Death in service insurance is not usually considered a p11d benefit or benefit in kind.

Providers don’t usually require employees to undergo medical tests unless an employee’s benefit exceeds the policy limit.

In most cases, yes. Death in service cover isn’t underwritten (unless an employee’s benefit exceeds the provider’s free cover limit). This means that the provider won’t ask questions about an employee’s health or lifestyle to decide whether they would offer cover.

Cover stops when someone leaves your business.

As with employees who leave voluntarily, cover will stop if you dismiss a member of your staff.

When you fill in the quote form, you will be asked to choose the age limit for cover. Once they reach that age, they stop being insured under the scheme. An employee may work beyond this age, but they will not be covered.

If a staff member takes a leave of absence from your business, cover is usually suspended. This can be reinstated when they return to work.

Normally you will contact your death in service insurance scheme provider and advise them of the death. You'll be asked to fill in a claim form (some providers have an online claim service) which is then sent to the trustees of the scheme to be authorised. The trustees will then decide who should receive the lump sum payment. They will consider the expression of wish form if one has previously been completed by the deceased.

You can find out more by reading our guide ‘Death in service insurance: How to make a claim’ .

Most death in service insurance claims are accepted. In fact, research by Group Risk Development (Grid) has revealed the UK group risk industry paid out 99.5% of new claims made in 2022.

The length of time it will take to receive a death in service payment will depend on the case and whether the trustees have all the necessary paperwork. Usually, the process is complete within 2-4 weeks.

Each of the providers on our panel offer employee assistance programmes with their policies at no extra cost. Your employees can take advantage of an online GP, bereavement counselling and mental health support. The employee benefits on offer and their terms and conditions will vary depending on which provider you choose. You can find a full benefits comparison and links to providers’ websites here.

When you start your scheme, your employees can fill out a form to state who they wish to receive the death in service payout. This form is called an ‘expression of wish’ form or a ‘nomination of benefit’ form.

This does not guarantee the benefits will be paid to the nominated individual(s). The lump sum is held in a trust and the trustees have discretion over who the payment is made to. Although they will take the expression of wish form into account.

Cover lasts as long as you have a policy in place. You can cancel the policy at any time, or your insurance provider will cancel it if you do not pay the premiums, at which point cover will stop.

Most of the providers on our panel will offer cover up to 75 years old. One provider will offer cover to 74 years of age. You can find out more about the providers on our panel here.

When you take out a death in service insurance policy, you will need to ensure a trust is in place to manage your scheme.

You may wish to join a master trust, which is a HMRC registered scheme set up and run by a third party to manage and administer your scheme. Alternatively, you can set up your own corporate trust. Learn more by reading our guide, ‘What is a master trust?’.

Both schemes are written in trust. A registered scheme allows tax-free lump sum payments up to the individual Lump Sum Allowance (iLSA). It takes into account the death in service scheme and other registered pension schemes.

An excepted scheme allows payments to be made outside the iLSA but are subject to different tax rules. An excepted scheme can be used by higher earners who have exceeded their iLSA. They often run alongside registered schemes, but from a separate trust.

No, we only offer registered death in service schemes.

Yes. It's just down to how an insurance provider chooses to describe the product. 'Assurance' has a similar definition to 'insurance' for financial products, and so providers may use both terms.

Yes, you can. Normally, companies review their scheme every two or three years when the guaranteed rate ends. Just enter your information into our quote form and you will receive new quotes in just a few days.

Yes, you can move your scheme to another provider at any time. You can source a new provider for future cover, then contact either Protect My People or your current provider directly to cancel your existing policy.

Cancelling mid-term would not incur any fees. But you would receive termination accounts and costings based on the number of days your employees have been covered by the policy.

Alternatively, you can wait until your current policy is due for renewal.

When the renewal date for your policy is approaching, we will be in touch to provide you with an updated quote with your current provider. To move to another provider, you can request further comparison quotes, which we will provide within just a few days.

Nothing. We help you compare death in service insurance quotes and arrange the policy with the insurance provider on your behalf. You do not pay us a fee for doing this. We receive commission from the provider which is a percentage of the total annual premium depending on scheme size.

No. Our providers do not accept payment via digital bank accounts such as Monzo, Revolut or Chase. Most traditional high-street banks should be accepted. Please ask your chosen provider for more information.

Simply enter your information into our quote form and we’ll do the rest!