Death in service and life insurance — what's the difference?
Death in service is an employer-provided group benefit. It pays a multiple of your salary (typically 2–4x) to your beneficiaries if you die while employed. The employer pays the premium.
Personal life insurance is a policy you take out yourself. You choose the sum assured, the term, and the beneficiaries. You pay the premium. It stays with you regardless of your employment situation.
The key limitations of death in service
- Fixed multiple: Typically 2–4x salary — often not enough to clear a mortgage and replace income
- Tied to employment: Cover ends the day you leave the company
- Discretionary payout: Trustees decide who receives the money — not a legal obligation
- No flexibility: You can't choose the amount or term
- Tax exposure: May form part of your estate if not in trust
Do I need personal life insurance if I have death in service?
For most people, yes. Death in service is a valuable starting point — but the gap between what it pays and what your family actually needs is often significant. Personal life insurance fills that gap and stays with you no matter where you work.
How to use both together
Many people use death in service as a foundation and take out a personal policy to top up the difference. For example:
- Death in service: £150,000 (3x salary of £50,000)
- Personal level term: £200,000 (to cover remaining mortgage)
- Personal level term: £150,000 (additional income replacement)
- Total protection: £500,000
Frequently Asked Questions
Death in service is a form of group life insurance — it pays out on death like personal life insurance. But it's provided by employers, is not portable, and has significant limitations compared to personal cover.
The payout is usually free of income tax. However, if it isn't written in a discretionary trust (most employer schemes are), it may form part of your estate and be subject to inheritance tax.