Death in Service vs. Private Life Insurance (UK)
| Feature | Death in Service (Work Scheme) | Private Life Insurance |
|---|---|---|
| Who provides it? | Employer (as part of employee benefits) | Insurance company (you buy it yourself) |
| Cost | Usually free (paid by employer) | Monthly premium (based on age, health, cover amount) |
| Coverage Amount | Multiple of salary (e.g., 2–4× annual salary) | Chosen by you (e.g., enough for mortgage, debts, kids’ education) |
| When it pays out | If employee dies while employed | Anytime during policy term (or lifetime for whole-of-life) |
| Flexibility | Fixed rules, employer decides | Fully customizable (term length, payout amount, beneficiaries) |
| Portability | Ends when you leave job | Continues as long as you pay premiums, even if you change jobs |
| Tax treatment | Paid into a trust, usually inheritance tax-free | Can also be written into a trust to avoid inheritance tax |
| Covers family? | Mainly employee only | Can add spouse/partner and children if you want |
| Control | Employer controls scheme | You control policy terms |
Why Families Often Use Both
- Death in Service = nice bonus safety net (but limited & job-dependent).
- Private Life Insurance = real long-term security, tailored to family needs (mortgage, kids, lifestyle).
- Together, they give a family both immediate free coverage and personalised protection.
For example:
- If someone earns £35,000 with a 3× salary death in service = £105,000 payout.
- But if they have a £250,000 mortgage + young kids, they’d take out £250,000+ private life insurance too.
Do you want me to also break down the average monthly cost of private life insurance in the UK (e.g., for different ages)? That way you can see how affordable it usually is.