Terms and conditions, The Great Gatsby, your life insurance (also known as a death in service benefit) – these are all things we pretend we’ve read but haven’t (watching the movie doesn’t count).
But if you haven’t read it, how do you know if it’s any good? This handy guide will break down and compare death in service (AKA your employer provided life insurance policy) to life insurance so you know all the facts.
What’s the difference between death in service and life insurance?
Death in service can be part of your benefits package provided by your employer. You might not even know you have it (it isn’t exactly as eye-catching as ‘work from home’ or ‘dress down Fridays’), so check with your HR department.
It can pay out a tax-free lump sum if you die while employed by your company. In the case of a successful claim, the payout goes to a person chosen by you.
Life insurance also pays out a tax-free lump sum, but you can choose how much you’re covered for, unlike your death-in-service.
Do you have enough cover?
Do you know how much your work death in service benefit pays out? Is it enough to support your family if you were to pass away?
Your company death in service will cover you, but it’s meant to fit your employer’s needs, not yours. A personalised policy that you would get through a broker, who will recommend a policy based on your circumstances and needs.
Does life insurance have better perks?
Your work policy is the policy that works best for the business, not you. This means that you may be missing out on perks that could have been included with a personal plan.
Health MOTs, support from qualified staff for long term physical or mental illnesses, remote GP appointments, second medical opinions. Plus, some of these benefits are available for both you and your family to access.
What if I move jobs?
If you have life insurance through IGotCover it isn’t tied to a job and can follow you wherever you go, it doesn’t depend on your job. You can be covered no matter what direction your career takes you, while your death in service plan ends if you change jobs or get let go and a new employer might not offer it.
Who gets my death in service benefit?
The payout from your death in service benefit goe to one person, it can be whoever you want it to, you just need to choose them. However, a life insurance payout can be distributed multiple ways. You can directly pay an amount towards your mortgage and you can also assign a sum to multiple people.
The payout from both death in service and life insurance would be free from income tax.
How soon can your death in service policy pay out?
Death in service payouts can take between two weeks and thirty days to pay out, compared to life insurance, which can pay out in as little as five to seven days. A faster payout means they have one less thing to worry about (and focus on the major issue of you being gone).
