Death in Service Value Checker UK

How Much Is Your Death in Service Benefit Worth? Use Our UK Calculator to Plan Your Family's Financial Future

Death in service benefit is one of the most valuable perks an employer can offer. It’s a financial safety net designed to support your loved ones if you were to pass away while employed. But have you ever stopped to work out exactly what that benefit is worth in pounds and pence?

Understanding this figure is the first step towards building a solid financial plan for your family's future. Our free and simple Death in Service Value Checker is designed to give you that clarity in seconds.

This guide will walk you through what death in service benefit is, how to calculate its value, and what to do once you know your number.

What is Death in Service Benefit?

Think of death in service benefit as a type of life insurance policy provided by your employer. If you die while you are on the company's payroll, your employer's scheme will pay out a tax-free lump sum to your nominated beneficiaries.

Key points to remember:

• It’s a workplace perk: You only have this cover while you are employed by that specific company.
• It’s usually a multiple of your salary: The payout is typically calculated as two, three, or four times your annual salary.
• The payout is tax-free: The money is paid from a discretionary trust, so it usually isn't subject to inheritance tax and your beneficiaries receive the full amount.

It's a fantastic benefit to have, but it's crucial not to overestimate its power or forget its limitations.

How to Use Our Death in Service Value Checker

Our calculator is designed for simplicity. You only need two pieces of information to get an instant result.

Where to find your information: You can usually find your death in service multiple in your employee handbook, your contract of employment, or on your company's benefits portal. If you can't find it, a quick email to your HR department should give you the answer.

Here’s how to use the tool:

1. Enter Your Annual Salary: Input your gross annual salary (your salary before tax) into the first box.
2. Enter Your Benefit Multiple: Input the multiple offered by your employer (e.g., 2, 3, 4, etc.).
3. Calculate Your Benefit: The calculator will instantly show you the total lump-sum payout your family would receive.

Worked Example

Let's see how it works in practice.

• Name: David
• Annual Salary: £45,000
• Death in Service Multiple: 4x salary

Using the Death in Service Value Checker, David’s calculation would be:

£45,000 (Salary) x 4 (Multiple) = £180,000 (Total Payout)

David’s family would receive a tax-free lump sum of £180,000.

Is Your Death in Service Payout Enough?

Knowing your payout figure is a great start, but the next question is a big one: is it enough? A sum like £180,000 sounds large, but it needs to cover your family's expenses for many years to come.

Take a moment to consider what that lump sum would need to pay for:

• Your mortgage: Could it clear the remaining balance on your home loan?
• Household bills: Council tax, gas, electricity, and water bills add up quickly.
• Childcare costs: Nursery fees and after-school clubs can be a significant monthly expense.
• Future education: School trips, university fees, or other training costs.
• Debts: Any outstanding car loans, credit card balances, or personal loans.
• Daily living: The cost of food, clothing, and transport for your family.

When you start adding these up, even a generous death in service benefit can look smaller than you first thought.

Common Mistakes When Relying on Death in Service

Relying solely on your workplace benefit can leave your family under-protected. Here are three common mistakes to avoid.

1. Assuming It’s Enough: The most common error is thinking a 4x salary multiple will be sufficient. For a young family with a large mortgage and decades of future expenses, it may only provide a short-term buffer.
2. Forgetting It's Tied to Your Job: This is a critical point. If you change jobs, are made redundant, or decide to become self-employed, your death in service cover ends immediately. This can create a dangerous gap in your family's financial protection.
3. Not Nominating a Beneficiary: Your employer’s scheme is usually run through a trust. You need to complete an 'expression of wish' or 'nomination' form to tell the trustees who you want the money to go to. If you don't, the payout can be delayed significantly and may form part of your estate, making it liable for Inheritance Tax.

Topping Up Your Cover: Life Insurance and Private Medical Insurance

Once you’ve used the calculator and assessed your family’s needs, you might find there’s a shortfall. This is where personal insurance policies, which you own and control, become essential.

Life Insurance

A personal life insurance policy is the perfect way to top up your workplace cover. It provides a guaranteed, tax-free lump sum that you choose, ensuring your family has enough to clear the mortgage and live comfortably.

Benefits of a personal life insurance policy include:

• It’s portable: The cover stays with you, regardless of who you work for.
• It’s tailored: You choose the amount of cover and the length of the policy to match your specific needs, like the term of your mortgage.
• It’s affordable: For a healthy non-smoker, comprehensive cover can cost less than a few weekly coffees.

The expert advisers at WeCovr can help you compare quotes from leading UK insurers to find the right policy at the right price.

Private Medical Insurance (PMI)

While life insurance protects your family financially if you pass away, private medical insurance (PMI) is designed to protect your health and finances while you are living. It gives you fast access to expert medical care, helping you get back on your feet sooner after an illness or injury.

It's important to understand what PMI does and doesn't cover. UK PMI policies are designed to cover acute conditions (illnesses or injuries that are curable) that arise after you take out the policy. They do not cover pre-existing conditions you already have or chronic conditions that require long-term management.

As a WeCovr customer, you get complimentary access to CalorieHero, our exclusive AI-powered calorie and nutrition tracking app, helping you stay on top of your health goals. Furthermore, customers who purchase life insurance or PMI often qualify for discounts on other types of cover.

What to Do After You Get Your Result

1. Review Your Needs: Compare your calculator result with your family's outgoings. How many years would the payout last?
2. Check Your Nomination Form: Contact your HR department to ensure you have an up-to-date 'expression of wish' form on file.
3. Consider a Top-Up: If you've identified a shortfall, it's time to think about a personal life insurance policy.

Frequently Asked Questions (FAQ)

1. Is death in service benefit taxable in the UK? No. In most cases, the lump sum is paid out from a discretionary trust and is therefore free from income tax and inheritance tax.

2. What happens to my death in service benefit if I leave my job? Your cover ceases the day you leave your employment. This is a key reason why having a separate, personal life insurance policy is so important for continuous protection.

3. Can I have both death in service cover and a personal life insurance policy? Yes, absolutely. It's very common and highly recommended. Many people use their death in service benefit as a foundation and top it up with a personal policy to ensure their family is fully protected.

4. How do I nominate who gets the money? Your employer's HR or pensions department will have a 'nomination of beneficiary' or 'expression of wish' form for you to complete. It's vital to fill this in and keep it updated, especially if your personal circumstances change (e.g., marriage, divorce, or having children).

Ready to take the first step towards securing your family's future? Use our free Death in Service Value Checker to find out your number in under a minute.

If you discover a gap in your protection, contact the friendly team at WeCovr. We can provide a no-obligation quote to help you find the perfect life insurance or health insurance plan for your needs.