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Death in service: what it means for you
Death in service is a workplace benefit that gives your family financial security: a tax-free cash sum, paid if an employee passes away while on the company payroll (Legal & General ↗).
This guide is for employees: what it means, how the payment reaches your family and how long it takes, whether it is taxable, and whether you still want life insurance of your own.
Every claim here is our summary of a named external source, linked beside it. Sources change: check the wording at the link before you rely on it.
What does death in service mean?
Royal London describes it as a workplace benefit that pays out if an employee passes away while employed by the company (Royal London ↗).
The payment is normally a tax-free cash sum, paid at the discretion of the scheme's trustees, who take into account who you asked to receive it (Legal & General ↗).
GRiD, the group risk industry body, says the benefit can be a lump sum payable to nominated beneficiaries or, less commonly nowadays, a taxable pension for dependants (GRiD ↗).
The lump sum is usually a multiple of annual salary (Legal & General ↗): the death in service benefit guide covers how much, and who gets it.
While employed
You are on the payroll
The benefit covers employees while they are on the company payroll.
Making a claim
The scheme is told
At Canada Life, for example, a trustee or someone authorised to sign for them makes the claim.
The decision
The trustees decide who is paid
They have discretion, and take into account who you nominated.
The payment
A lump sum to your family
Normally a tax-free cash sum; less commonly a pension for dependants.
Sources: payroll, tax-free sum and discretion (Legal & General ↗); who claims (Canada Life ↗); lump sum or pension (GRiD ↗).
Which page do you need?
This page is the employee's view.
If you want the rules of the benefit itself (the multiple of salary, nominations, the NHS scheme), read the death in service benefit guide.
If you are the employer buying the scheme, see death in service insurance, group life insurance and what it costs.
- The rules
Death in service benefit
How much it pays, who gets it, the NHS scheme, benefit in kind and the pension link.
- For families
Death in service payments
How a claim is made, what it needs and who decides who is paid.
- Calculator
Death in service calculator
Your salary times your scheme’s multiple, with the tax checks.
- For employers
Death in service insurance
Buying a scheme for your staff: setting it up, quotes, what to compare and providers.
- For employers
Group life insurance
The group life assurance scheme: minimum employees, registered or excepted, small firms.
- For employers
Group life insurance cost
What death in service costs an employer, what drives the premium, published examples.
Death in service guidelines, your policy and the law
No law says an employer must offer it (Legal & General ↗).
Where it is offered, your employer's death in service policy sets the terms: the card shows who sets which rule, and what to ask HR.
- The law. Not mandatory, says Legal & General (Legal & General ↗); an additional extra rather than a legal requirement, says Royal London (Royal London ↗)
- Your policy. Schemes vary, from the level of cover to how the money is paid out (Royal London ↗)
- The framework. Most group life policies operate within HMRC's framework for a registered occupational pension scheme (GRiD ↗), so trustees, not your will, decide who is paid
Four questions for HR
- Am I covered, and from when?
- What multiple of salary, and which salary?
- Is there a nomination form, and is mine up to date?
- When does cover stop: leaving, or a set age?
The answers are in your scheme's rules (Royal London ↗).
Death in service payment: how long it takes
The claim goes to the insurer through the trustees.
Canada Life, for example, takes the claim from a trustee or someone authorised to sign on the trustee's behalf, aims to give a decision within five working days of receiving it, and pays the trust; the trustees then pay the beneficiaries (Canada Life ↗).
Other insurers publish their own timings, set out in the table.
The family does not wait for probate: MoneyHelper says pensions are not covered by any will, so you do not need to wait for probate (MoneyHelper ↗).
For the documents a claim needs, see death in service payments.
Alphabetical, not a ranking. Each insurer measures a different step, so the figures are not comparable with each other; the trustees' own decision comes after.
Is death in service taxable?
Usually not.
Legal & General says death in service payments aren't usually subject to tax, such as Income Tax or Inheritance Tax (Legal & General ↗).
The four checks on the right depend on the scheme type and the person's age.
Registered schemes. The lump sum counts towards the lump sum and death benefit allowance (Legal & General ↗): £1,073,100 unless a higher protected amount applies, with any excess taxed at the recipient's marginal rate (HMRC PTM172000 ↗).
Excepted policies. The benefits do not count towards the allowance, but discretionary trust charges may apply, each no more than 6% (Legal & General ↗).
HMRC says deaths within the first ten years are likely to be taxed at 0% (HMRC ↗).
Benefit in kind is covered in the death in service benefit guide, and the two scheme types on the group life insurance page.
We do not work out anyone's tax: check GOV.UK or ask an accountant.
Check 1
How old was the person?
Under 75, no Income Tax is usually charged on a lump sum paid within two years.
Check 2
Registered or excepted?
Only a registered scheme’s lump sum counts towards the lump sum and death benefit allowance.
Check 3
Is it over the allowance?
For a registered scheme, the excess over the allowance is taxed at the recipient’s marginal rate.
Check 4
Inheritance Tax
Registered: outside the estate from 6 April 2027. Excepted: discretionary trust charges may apply.
Sources: age and timing (MoneyHelper ↗); the allowance (HMRC PTM172000 ↗); excepted policies (Legal & General ↗); April 2027 (GOV.UK ↗).
Do I need life insurance if I have death in service?
MoneyHelper suggests checking whether you already have cover through work, because employee packages often include death in service benefits linked to your salary (MoneyHelper ↗).
Whether that is enough is a question about your family, not the scheme.
Legal & General says the cover is based on a multiple of your salary, which may or may not be enough to meet your protection needs, and that when you leave the organisation you are no longer protected by it (Legal & General ↗).
Royal London says you also lose it if your employer goes into administration, and that death in service payouts tend to be smaller than life insurance payouts (Royal London ↗).
The decision is yours.
For a recommendation on your own position, use an FCA-authorised adviser; the death in service calculator shows what your scheme's multiple comes to.
Question 1
Would a multiple of salary be enough?
Set it against what your family would need to cover.
Question 2
What if I change jobs?
Cover ends when you leave; a new employer may or may not offer it.
Question 3
What if my employer fails?
Royal London lists administration as a way to lose the benefit.
Question 4
Who would receive it?
The trustees decide, guided by your nomination.
Sources: enough, and leaving (Legal & General ↗); administration and payout size (Royal London ↗); the trustees (Legal & General ↗).
Death in service vs life insurance
The two can sit side by side.
Death in service is tied to the job; a personal term policy is tied to you.
MoneyHelper says term policies run for a fixed period, such as five, ten or 25 years, and can be written in trust (MoneyHelper ↗).
Death in service in numbers
GRiD publishes the group risk market's claims each year.
In 2025, group life assurance paid 12,730 claims, worth £1,825,938,475, with an average new claim of £143,436 (GRiD ↗).
Its latest count of cover is for 2023: 11,158,083 people insured by the group risk market for death benefits (GRiD ↗).
Check it for yourself
Every claim on this page is our summary of one of the documents listed here.
We last checked them against the live sources on 28 September 2026.
The documents are the authority, not this page.
Insurers and HMRC update them, so validate any figure or condition at its link before you rely on it.
- Legal & General: death in service v life insurance ↗Tax-free cash sum, trustees’ discretion, not mandatory, paid quickly once accepted
- Royal London: death in service benefit, is it enough? ↗Nominations, trustees’ final say, and when the benefit is lost
- MoneyHelper: what is life insurance? ↗Term policies, trusts, and checking for death in service through work
- MoneyHelper: pensions help after someone’s death ↗Expression of wish forms, trustee discretion, the age-75 rule and probate
- GRiD: group life assurance ↗The industry body’s description, tax summary and 2023 market figures
- GRiD: group risk claims paid in 2025 ↗Group life claims, value paid and average claim for 2025
- Aviva adviser: Group Life ↗Scheme sizes on Aviva’s online platform and its free cover limit
- Canada Life: group life insurance claims ↗Who claims, what it asks for, and how it pays the trustees
- Zurich Corporate Risk: group life insurance claims ↗How Zurich takes group life claims, and when it needs a death certificate
- HMRC Pensions Tax Manual, PTM172000 ↗The lump sum and death benefit allowance, and the marginal-rate charge on the excess
- GOV.UK: Inheritance Tax on unused pension funds and death benefits ↗Death in service benefits from registered schemes stay outside the estate from 6 April 2027
- Legal & General: relevant life and excepted group life policies ↗What an excepted group life policy is, the allowance and discretionary trust charges
- HMRC Inheritance Tax Manual, IHTM17092 ↗Excepted group life trusts and the first ten years
Death in service, answered
Not financial advice. This page is general information. Before buying insurance, the FCA tells consumers to check the firm on its Firm Checker (FCA ↗). For free guidance, see MoneyHelper.