Death in Service UKWhat It Is, How It Works & What You Get

Death in service is a workplace benefit that pays a lump sum to your nominated beneficiaries if you die while employed by the company providing the cover. It is one of the most valued employee benefits in the UK, yet many employees do not fully understand what they have.

According to the Association of British Insurers (ABI), UK insurers paid a record \u00a38 billion in protection claims in 2024, with group life and death in service forming a significant part of this total. GRiD (Group Risk Development), the industry body for group risk benefits, reports that over 13 million employees are covered by group life schemes.

Death in service is typically provided through a group life insurance policy taken out by your employer. The payout is usually expressed as a multiple of your annual salary — most commonly 2x, 3x or 4x. For example, if you earn \u00a340,000 and your employer provides 3x death in service, your family would receive \u00a3120,000 tax-free.

The tax treatment of death in service benefits was clarified by HMRC in July 2025:

If you are an employer considering death in service for your workforce:

• Choose your scheme type — Registered (pension-linked, LSDBA applies) or excepted (outside pension, no LSDBA). Most employers start with registered.
• Set the cover multiple — Industry standard is 2-4x salary. GRiD publishes annual benchmarks.
• Set up a trust — The scheme should be held in trust so payouts bypass employees' estates.
• Ensure nomination forms are completed — Every employee should nominate beneficiaries. Without this, trustees have discretion and delays occur.
• Consider complementary cover — Death in service protects families. Add key person insurance to protect the business itself, and group income protection for long-term illness.

For small companies with fewer than 5 employees, relevant life insurance may be more suitable than a group scheme.