What Is Death In Service? And Will It Be Enough?
Whether you are 25 years into your career or just starting out as a junior. Most people will know a little bit about the Death in Service benefit, as it is pretty common benefit in most jobs. There are many reasons why you might get it as a benefit. Yet, it is important to understand what it offers and its limitations.
The general view from a lot of people is that it offers a solution to not having a life insurance policy. It does offer a form of life insurance that could help your family out should the worst-case scenario happen. It is also important to take into consideration that everyone’s situation is different. Death in service could be enough for some. But these are some of the things you should be aware of that could impact the future.
What is Death in Service?
Death in Service is a life insurance benefit offered by most companies to their workers. The conditions for this type of benefit will vary depending on who you work for. Sometimes it can only be offered if you are part of the company pension. For most employees it is created by the hr department when you start with a new employer.
What Does It Do?
Whilst you remain on the payroll of a company Death In Service will pay your loved ones a tax free lump sum if you pass away. Generally the Death In Service benefit is calculated in multiples of your annual salary. The most common multiple is three times annual salary, but a few employers offer more. This means that while you are on the company payroll you are covered should you pass away. This protection extends to dying outside of the work place. As long as you are on the company payroll your chosen beneficiaries will be paid the tax-free lump sum.
For some people they could happy with this level of cover. Depending on the company it could be enough of a policy benefit that 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 Might Fall Short
Life for everyone is unpredictable; we make plans and they change on a daily basis. This can be true for life insurance. Multiples of your salary might seem like lots of money and there is always the chance it might not be enough. When it comes to planning for the future and imagining your family without you, you have to consider that your income is missing too. It’s hard to think about but life has to continue on should the worst happen.
Things like a mortgage, loans, general food shopping and day to day bills still need to be paid for. While in the short term Death in Service benefit could help, in the long term it will not be enough.
Losing Your Job = Losing Protection
The employment market can be volatile at the best of times. It is quite clear that during and after the pandemic it can leave you exposed in ways you may not realise. One of the most important aims of insurance is to protect your family. As highlighted above, with Death in Service, you will only be covered while you are on the company payroll. Should you lose your job you will lose the safety net almost straight away.
Looking Forward To Retirement?
For some it might seem like a long way away from now but it’s an important thing to consider. Settling for Death in Service will leave you vulnerable when it’s time to retire. Getting life insurance when you’re younger is much cheaper, offering more protection for less money. Although there are insurance products available for people who have retired without life insurance. Many are not able to offer the same level of cost for the protection requirements. You can also apply for many other great benefits if you select the right policy. Avoid leaving yourself vulnerable coming into your golden years.
Getting the Life Insurance Cover
We all want what’s best for our families. Each individual life situation is different and there are many 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 by clear and clever planning. If you’re confused about where to start. We will help 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.