Death in service is the benefit, which is given to employee, and the company pays the tax-free lump sum amount to the employee at the time of the death. The payout is almost double or four times to your annual salary.
Therefore, if you are earning 30,000 per year then your family can expect the tax-free amount between 60,000 to 120,000 as a death in service life insurance.
It is not required that you should die while working or death happen as a result of some work activity, you just need to be on the payroll of the company.
Death in service is a very valuable benefit but some employers are more generous than all others are so you need to check out the exact offer if there is anything. You need to contact the human resource department of your company for getting out more information. There are various benefits also which are linked to the company pension. So it is also required sometimes that you will have to become the member of the pension scheme for qualifying the death in service payouts.
This tax-free cash after your death while help your family and the dependents for coping financially after your death. This death in service is very beneficial for the dependents and family. Sometimes the money are paid into the discretionary trust , which means that the trustees will be having the final say that the money would be going to whom.
- All the wishes are taken into account assuming that you have written and express the wishes in the nominations of the benefits letter. However, the trustees are having the final say.
- You also need to keep in mind that the benefit of death in service cannot be assigned to the mortgage but the family can use the money for paying down any of the mortgage debt.
- There are some people who are assuming that they does not require any life insurance if they are having the death in service benefit but if you are linking this life policy to the mortgage the you have to specify the beneficiaries and it is worth taking out the separate life insurance for it.
- There are additional cover for life insurance requires when the death in service life insurance would leave your family financially unstable.
- Most of the advisors are recommending the life cover about ten times of your income.