Death in service cover

Find out what death in service insurance means, what it includes, what isn't covered and whether it provides sufficient life cover.

The Insurance Surgery Life insurance logo

Compare life insurance providers

  • Existing medical conditions covered
  • Guaranteed price match
  • Feefo award winning service
Go to site

Employees are the life blood of the companies they work for, which is why many organisations provide staff with a range of benefits, including “death in service” cover. This can ease employees’ worries by reassuring them that their families will be well looked after if something happens to them, whether in the course of their work duties or elsewhere. Our guide explains how it works.

What is death in service cover and how does it work?

Death in service is usually offered as a company benefit and offers a payout if an employee dies while on the company’s payroll. The death can be work-related or not, and the payout is meant to help out the employee’s chosen beneficiaries following their death.

Why should I think about getting death in service cover?

If this is offered to you as a benefit by your job, that will likely be more economical than getting your own life insurance.

However, there are a few things to consider:

  • Death in service payout is usually calculated as a percentage of your salary, so make sure this will be sufficient for your family’s needs should something happen to you.
  • The benefit may fall under a discretionary trust, which means you may not know who will receive this benefit if you die.
  • You cannot typically assign this benefit to cover mortgage payments, though your beneficiaries are free to use the payout for this purpose.

What is the average payout for death in service cover?

The payout for a death in service policy is usually worked out in accordance with your salary and is normally several times the annual figure.

Do I need life insurance if I have death in service cover?

This depends on your circumstances. If your predicted payout is likely to meet your family’s outgoings in the future, this cover may be enough.

However, bear in mind that you cannot assign this payout to pay off your mortgage (though the money can be used for this by the beneficiaries) and the policy usually doesn’t include critical illness cover, which offers financial assistance if you become seriously ill.

Is life assurance the same as death in service?

No. Death in service is offered as a company benefit to employees, while life assurance is a life insurance policy that individuals can take out for themselves.

Life assurance usually offers a higher payout and more benefits, like critical illness cover.

What happens to my pension if I die?

Some companies provide death benefits through the private pension scheme they offer. If this is the case, your beneficiaries should contact your pension scheme administrator for more information after you die.

Your beneficiaries will usually receive a payout relating to your pension, but this will vary by provider and type of pension arrangement. In most cases, as pensions are considered to sit outside your estate, your beneficiaries should be able to access your retirement savings without having to pay inheritance tax.

What happens if I die in service?

If you die while working for the company, your beneficiaries will receive a lump sum payout. The death does not have to be a result of duties carried out within your role – you simply need to be on the company’s payroll.

How does it work in practice?

Usually for death in service, the death doesn’t need to be related to the work you do for your employer.

So, for example, if you’re an accountant at a factory and you die in a car crash while driving to the supermarket, your beneficiaries will still receive a payout from your death in service benefit.

Pros and cons


  • If offered as a company benefit, you won’t have to pay for cover
  • The payout is tax-free
  • Can help ease your mind by providing reassurance your loved ones will be looked after if something happens to you


  • The payout may not be sufficient to cover your family’s needs
  • Usually cannot be assigned to pay off a mortgage
  • Employees don’t have control over the policy details

Frequently asked questions

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site