Relevant Life vs Death in Service
Both pay your family a lump sum if you die while employed, and both are funded by the employer. The difference is who controls the cover, how much it pays, and what happens when your circumstances change. The question: is the scheme you are automatically enrolled in actually enough?
Relying on death in service, or need cover of your own? Compare both on your figures.
Get a Free Quote →The short answer
An individual death-in-service-style policy arranged and paid for by the employer for a single director or employee. Cover can reflect total remuneration including salary and dividends, typically up to around 25 times, subject to insurer and HMRC limits. Written in a discretionary trust, so the payout generally sits outside the estate. Premiums are usually an allowable business expense.
A benefit provided through an employer’s group life scheme, paying a multiple of basic salary, most commonly two to four times, if the employee dies while employed. Cover is automatic, requires no medical underwriting up to the free-cover limit, and costs the employee nothing. It ends when employment ends and the multiple is set by the employer, not the individual.
Death in service is a group benefit set by the employer: convenient and free, but capped, salary-based, and tied to the job. Relevant Life Insurance is an individual policy sized around the person: higher potential cover, dividends included, and not dependent on group scheme membership rules.
Which is right for you?
- You are a limited company director with no access to a group death in service scheme
- You take a low salary and high dividends, so a salary multiple would drastically understate your real income
- Your death in service benefit is capped below what your family would actually need
- You have substantial pension savings and want life cover that does not interact with pension allowances
- You want cover sized around your circumstances rather than a uniform multiple set by an employer
- Your health has changed and you want to lock in individually underwritten cover while you can
- You are an employee and the scheme multiple genuinely covers your family’s needs
- You have no dependants or significant liabilities, and a basic multiple of salary is adequate
- Your health makes individual underwriting difficult, and the scheme’s free-cover limit accepts you automatically
- You want cover at zero personal cost and accept that it ends with your employment
- Your remuneration is entirely salary, so the multiple reflects your true income
Not sure whether your death in service is enough? We will help you weigh it up.
Get a Free Quote →Side-by-side comparison
Want these worked out for your salary, dividends, and scheme benefit?
Get a Free Quote →Real-world scenarios
Illustrative examples showing how the decision tends to play out. Names and figures are for illustration only.
Tom, sole director with no group scheme
Tom runs an IT consultancy as its only employee, drawing a salary of £12,570 and dividends of £75,000 per year. He has a partner, two children, and a £320,000 mortgage.
Read the full scenario
With no other employees, he cannot access a group death in service scheme; the minimum membership requirements rule him out. A Relevant Life Insurance policy arranged through his company can provide cover based on his total remuneration of around £88,000, not just his salary.
Premiums are paid by the company as a business expense, and the payout would reach his family via a discretionary trust, outside his estate.
Aisha, employed with four times salary cover
Aisha is an operations manager earning a £48,000 basic salary. Her employer’s scheme pays four times salary, £192,000, and she has no mortgage and no dependants.
Read the full scenario
For her circumstances, the death in service benefit is genuinely adequate: it would clear her modest liabilities and leave a meaningful sum for her family. Taking out additional cover would cost money to solve a problem she does not currently have.
The sensible step is simply to check her nomination form is up to date and revisit the position if she buys a property, has children, or changes jobs, since the cover vanishes the day she leaves.
Raj, underinsured by his salary multiple
Raj is a director of a family logistics business, drawing £30,000 in salary and £85,000 in dividends. The company’s group scheme pays four times salary: £120,000.
Read the full scenario
His real annual income is £115,000, so the death in service benefit represents barely one year of income for his family, who also carry a £400,000 mortgage. The scheme cannot be adjusted for him alone without changing terms for every member.
A Relevant Life Insurance policy alongside the group scheme could be sized on his full remuneration, topping his total cover up to a level that reflects what his family would actually need, without disturbing the existing scheme.
The rule of thumb
Ready to see your options? Get a free, no-obligation quote.
Get a Free Quote →Frequently asked questions
Can I have both death in service and Relevant Life Insurance at the same time?
Does a death in service payout count towards my pension allowances?
What happens to my death in service cover if I leave my job?
Is Relevant Life Insurance a benefit in kind?
How much death in service cover do most employers provide?
Can a sole director of a limited company get death in service cover?
Related decision guides
Not sure which is right for you?
Speak to one of our advisers. We will compare both options based on your specific circumstances, free and with no obligation.
Get a Free Quote →This guide is general information about how these policies work and is not personal advice or a recommendation. Tax treatment depends on your individual circumstances and the rules may change. The figures in the scenarios are illustrative only. Named individuals in scenarios are entirely fictional and created for illustrative purposes only. Consider speaking to a qualified adviser before deciding what is right for you.
