Many employers in the UK offer life insurance (often called “death in service benefit”) as part of their employee benefits package. It’s a great workplace perk that provides a level of financial security for your loved ones if you were to pass away while still employed by the company. But is it enough?
For lots of people, this employer-provided benefit is their first experience with life insurance. It’s easy, it doesn’t cost anything extra, and the peace of mind is reassuring. However, depending solely on this cover may leave gaps in your financial safety net.
Here’s what you need to know before deciding if death in service benefit is enough on its own, or whether it’s worth taking out additional life insurance yourself.
What is death in service benefit?
Death service benefit is a form of group life insurance provided by your employer. If you die while employed (even outside working hours), a tax-free lump sum is paid to your nominated beneficiaries. This is usually a multiple of your salary, such as 2, 3, or 4 times your annual pay.
You’ll usually be enrolled automatically when you start your job, and you don’t need to complete any medical checks.
The benefits of employer life insurance
It’s free or included in your package
You don’t usually pay anything extra for death in service—it’s an employer-paid benefit. That makes it a valuable bit of protection at no personal cost.
No medical checks required
Group schemes typically don’t require a health assessment, making this benefit accessible even if you have pre-existing medical conditions that could raise premiums on a personal policy.
Immediate cover when you join
Once you’re eligible (usually after a short probationary period), your cover kicks in automatically — no forms, no fuss.
But is it enough?
That’s where things get a bit more complicated. While death in service benefit is a solid foundation, relying on it alone might not give your family the full financial protection they need.
It’s not portable
Perhaps the biggest downside: your cover ends when you leave your job. Whether you resign, are made redundant, or retire, the policy stops.
It may not cover your family full needs
A payout of 2 or 4 times your salary might sound generous, but think about how far that would really go. Would it be enough to cover:
- Your mortgage or rent
- Daily living expenses
- Childcare or school fees
- Funeral costs
- Any outstanding debts
In many cases, the answer is no. It’s a helpful payout, but often not enough to keep your family financially stable for the long term.
You have little control over the policy
Since the policy is owned and managed by your employer, you don’t have much say over the details, such as the level of cover, how long it lasts, or any optional add-ons (like critical illness cover).
Why consider a personal life Insurance policy too?
Supplementing your workplace benefit with a personal life insurance policy can give you more comprehensive, reliable cover, especially if you have children, a partner who depends on your income.
Here’s what a standalone life insurance policy offers:
- Guaranteed protection regardless of your employment status
- Customisable cover matches your family actual needs
- Fixed premiums, especially if you buy young
- Options like level term life cover or decreasing term cover (ideal for mortgages)
- Greater peace of mind, knowing your family will be fully covered
How much cover should you have?
There’s no set number, but many financial advisers recommend cover worth 10 to 15 times your annual income, especially if you have dependents.
Use online life insurance calculators estimate what your family would to:
- Maintain their lifestyle
- Pay off debts
- Cover living costs for a set number of years
- Fund children’s education or future milestones
Is death service a replacement for life insurance?
No, not entirely. Think of death in service as a helpful bonus layer of protection, not a full replacement for personal cover. It’s a great benefit while you have it, but if you want long-term, tailored security for your family, personal life insurance gives you more control and flexibility.
Final thoughts
If your employer offers a death-in-service benefit, make sure you’re enrolled and have named your beneficiaries. But don’t stop there. Review your family’s needs, long-term financial goals, and what would happen if that cover suddenly disappeared.
By having a personal policy in place alongside your workplace benefit, you’ll build a stronger, more reliable financial safety net — one that stays with you, no matter where your career takes you.
