What Is Death In Service? And Why It May Not Be Enough

Whether you’ve heard of it or not Death in Service is a pretty common benefit in some jobs. There are many reasons why you might get it as a benefit. Yet, it is important to understand whether or not it is actually the right fit for you.


A lot of people tend to look at it as the solution to not having a life insurance policy. Here is a form of life insurance that could help your family out should the worst-case scenario come true.


It’s important to remember that everyone’s situation is different. Death in service could well be enough for you but these are some of the things you should be aware of. 


What is Death in Service?


Death in Service is a life insurance benefit commonly offered by some companies to their workers. The conditions for this type of benefit will vary depending on your company. Sometimes it can only be offered if you are part of the company pension.


How does it work?


In the case of your death, your loved ones will receive a tax-free lump sum. Typically the amount varies but generally, it is multiples of your annual salary.


This means that while you are on the company payroll you are covered should you pass away. This cover extends to dying outside of work too.


As long as you are on the company payroll your chosen beneficiaries will be paid the tax-free lump sum.


What should you be aware of?


It may well be the case you are happy with this level of cover. Depending on the company it could be the case that the policy benefit is more than enough for your family.


Unfortunately, there are a few downsides to relying on this type of life insurance policy. With Death in Service, there are some things you should consider.


Why Death In Service May Not Be Enough Cover


Life can be unpredictable; we make plans and life gets in the way. This can be true for life insurance. Multiples of your salary might seem like plenty of money, there is always the chance it might not be enough.


When you’re imagining your family without you, you have to remember that your income is missing too. It's hard to think about but ordinary life has to continue on should the worst happen.


Things like a mortgage, loans and kids' education still need to be paid for. While in the short term Death in Service benefit could help, in the long term it may not be enough.


Losing Coverage at Short Notice


The employment market can be volatile at the best of times. This can leave you exposed in ways you may not realise.


One of the aims of insurance could be to protect your family. As we’ve mentioned before, with Death in Service, you could be]  only covered while you are on the company payroll. Should you lose your job at short notice you can lose the cover almost straight away.


Unless you have a pre-existing life cover policy your family could be left exposed should tragedy strike.


Ending at Retirement


It might seem like a long way away from now but it's an important thing to consider. Settling for Death in Service could leave you vulnerable when it's time to retire.


Getting life insurance when you’re younger can be cheaper. You can also apply for great benefits if you select the right policy. Things like child cover, accidental death cover and critical illness cover are all offered as optional benefits by Smart.


You want to avoid leaving yourself vulnerable coming into your golden years. 


Getting the Right Cover with Smart


No matter who we are we all want what's best for our families. Each individual situation is different and there are different things to consider. It doesn’t have to be complicated though. If you go for our age-based option, you can get a whole-life policy sorted out. This is where your premiums will start off lower while you are younger. This can be good for people who might be on a tighter budget in the early years of the policy. You’ll be covered for the future and there are plenty of great benefits to getting it sorted out.


It’s important to give yourself peace of mind when it comes to the future. If you’re confused about where to start, don’t worry! We can take you through the process step by step. After all, getting your life insured could be one of the most important things you do for your family.