If you asked most people what life insurance they have, they'd say something like: "I'm covered through work." And they'd believe it. They'd feel reassured. They might even stop thinking about it entirely.
The problem? Death in service is not life insurance. Not really. Here's what it actually is, and why the gap between what you have and what you need could be enormous.
What death in service actually is
Death in service is a benefit your employer pays your nominated dependants if you die while employed by the company. It's typically expressed as a multiple of your salary (usually 2x to 4x, though some employers offer up to 6x).
So if you earn £45,000 and your employer offers 3x death in service, your family would receive £135,000 if you died in service. That sounds decent. But here's what most people don't realise.
What death in service isn't
Death in service is a group scheme run by your employer under a master policy. You're covered as long as you're on the payroll. The moment you resign, get made redundant, or retire, the cover ends. There's no payout to carry forward, no conversion option in most cases, and no way to take it with you.
So if you left your job at 50 with no personal life cover in place, you'd be starting from scratch: older, potentially with health conditions that push premiums up or make cover harder to get.
The three gaps nobody talks about
Gap 1: The amount is usually too low
Think about what your family would actually need if you were gone. The mortgage. The childcare. The school fees. The years of income replacement. The debts. For most families with a mortgage and dependants, 3x salary doesn't come close to covering it all.
Gap 2: It doesn't cover serious illness
Death in service pays out when you die. Not if you have a stroke at 42, or get a cancer diagnosis, or can't work for two years because of a serious condition. For that, you'd need critical illness cover or income protection. These are separate products entirely.
Gap 3: It's not guaranteed
Your employer can change the benefit, remove it, or fold entirely. If the company enters administration, the group policy may no longer pay. This is rare but it happens, and you'll have no warning.
What should you actually have?
The right answer depends on your circumstances: your mortgage balance, your income, your dependants, your debts, and whether you're a single-income or dual-income household. But as a rule of thumb, most advisers suggest you need enough to:
- Clear the mortgage
- Replace your income for 5–10 years
- Cover any outstanding debts
- Provide for your children's education and care
What to do about it
Don't cancel your death in service. It's a free benefit, take it. But don't rely on it as your plan. Instead, use it as part of a wider protection strategy that you actually own and control.
A proper review will look at your death in service alongside your mortgage, your income, your partner's situation, and your wider financial picture, filling the gaps with the right cover at the right cost.