Death in Service Benefit is a form of life assurance. It is paid for by employers on behalf of their staff. In the event of an employee’s death, the policy pays a lump sum. Unlike worker’s compensation benefits the employee does not have to die at work.
The Death In Service Benefit is provided for an agreed amount e.g. US$100,000 per employee or alternatively, a multiple of salary such as 3 times annual basic salary. Each employee completes a nomination form which states who they wish to benefit from the money.
This type of insurance is usually cheaper than individual cover. Often there is a figure known as the ‘free cover limit.’ Employees receiving a benefit below this value do not require medical or financial underwriting. Employees suffering from poor health can find this particularly useful, especially if they cannot obtain insurance privately.
When an employee dies, the insurance company pays the Trustees of the benefit program. The Trustees then pay the person nominated by the employee to benefit. Often this is the employee’s family but it does not have to be.
Please contact us to discuss these schemes.