What is death in service?

It is life cover provided by your employer, usually set as a multiple of your basic salary, paid to your family if you die while working for them. It ends on the day your employment ends.

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What to find out about yours

The multiple, and what it is a multiple of
It is normally basic salary. Whether bonus, commission or overtime count varies between schemes, and the difference can be substantial for anyone paid partly on results.
Who would receive it
There is a nomination form, separate from any pension expression of wish. Trustees normally have discretion and use the form as a guide.
Whether it is registered or excepted
A registered scheme payout is tested against the member's lump sum and death benefit allowance. An excepted policy sits outside the pension regime and is not.
What happens when you leave
It stops. It has no cash value and there is no right to continue it individually.

How much is paid out

Group life insurers paid £1.8bn in claims in 2025, and the average claim was £143,436. Compare that with your own mortgage and the years your household would still need supporting.

Cover set at a multiple of salary takes no account of what you owe or who depends on you.

Cover ends on the day your employment ends, including when you retire or are made redundant.

Related questions

Is death in service the same as life insurance?

It is life insurance, arranged and paid for by your employer. The practical differences are that you do not choose the amount, you do not own it, and it ends with the job.

Does it pay out if I die outside work?

Yes. It pays out if you were employed at the time of death, wherever you died.

Do I need to do anything to keep it?

Keep the nomination form current, because it guides who receives the money.

Is it taxed?

Not normally, though it can be. A registered scheme lump sum is tested against the member's remaining lump sum and death benefit allowance, has to be paid within two years of the scheme learning of the death, and is taxable if the member died at 75 or over.

Calculators

Life cover calculator

Debts to clear, plus the income that would have to be replaced, less what is already in place.

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Where this fits

Ask your employer what the multiple is and who you have nominated, and we will work out how far it falls short of what your household would need.

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The advisers for this subject

Sunny Bharj

Sunny Bharj

Independent Financial Adviser

Tony Springer

Tony Springer

Independent Financial Adviser

Advising through Equity & General Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority. Check the firm on the FCA register under number 474163.

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