How long does it take to set up death in service insurance?

A group life scheme can typically be set up within 2-4 weeks. You will need employee data (names, dates of birth, salaries) and to choose a provider and cover multiple.

Death in Service Insurance UK 2026 | Employer Cover Guide

Key Facts: Death in Service Insurance

Death in service insurance (group life insurance) is the employer-purchased policy that funds death in service benefits.

-Premiums are corporation tax deductible as a business expense

-Typical cost: 0.3–1% of total payroll depending on workforce demographics

-Most providers require a minimum of 3–5 employees for a group scheme

-Registered schemes are IHT-exempt from April 2027 (HMRC July 2025)

-Claims acceptance rates above 98% across major UK providers (ABI)

-Alternative for small businesses: relevant life insurance (no minimum staff)

What Is Death in Service Insurance?

Death in service insurance is the group life insurance policy that an employer buys to provide death in service benefits to its employees. When employees hear 'death in service', they think of the benefit they receive. When employers think of it, they think of the insurance policy they pay for.

According to the ABI, UK insurers paid a record \u00a38 billion in protection claims in 2024. GRiD reports that group life is the most commonly offered group risk benefit, ahead of group income protection and group critical illness.

How Much Does Death in Service Insurance Cost?

The cost of death in service insurance depends on workforce demographics, cover multiple, and scheme type. According to Drewberry Insurance:

Small Tech Company (London, 10 employees, 4x salary)

Drewberry example (November 2025): approximately £31.97 per employee per month. Reflects younger, higher-salary workforce typical of tech sector.

Manufacturing Company (Yorkshire, 100 employees, 2x salary)

Drewberry example (November 2025): approximately £10.03 per employee per month. Reflects older, more manual workforce but lower cover multiple.

What Drives the Cost

Employee ages (older = more expensive), salary levels (higher = more expensive), cover multiple (4x costs more than 2x), industry/occupation, claims history, and scheme size (larger schemes get better per-head rates).

After Corporation Tax Relief

At 25% CT rate, a £10/month per employee premium effectively costs £7.50 after tax. Premiums are deductible as a business expense under <a href='https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim45525' target='_blank' rel='noopener'>HMRC rules</a>.

Registered vs Excepted: Which Scheme for Your Business?

The choice between registered and excepted group life determines the tax treatment of large payouts. Drewberry's guide explains the key differences:

Registered: simpler, pension-linked, LSDBA applies (\u00a31,073,100). Best for most employers. IHT exempt from 2027.
Excepted: outside pension, no LSDBA restriction, different trust requirements. Best as a supplement for high earners.
Combined: use registered for all staff up to LSDBA, excepted top-up for executives. Increasingly common.

For smaller companies, relevant life insurance provides individual death in service policies with no minimum staff requirement and no LSDBA issue.

Key Providers for Death in Service Insurance

Leading UK group life providers include Aviva, Legal & General, Zurich, Canada Life and Royal London. All are authorised by the FCA and are ABI members.

We are an information resource, not a broker. For regulated advice on setting up death in service insurance, consult a qualified employee benefits adviser or visit MoneyHelper.

Trusted Sources & Further Reading

This death in service insurance guide references:

HMRC BIM45525 — Corporation tax deductibility of premiums
HMRC IHT Pensions (July 2025) — IHT exemption confirmed
GRiD — Group risk industry data
Drewberry Insurance — Pricing examples and employer guide
ABI Claims Data 2024
Moore Kingston Smith — LSDBA
Menzies LLP
MoneyHelper

Death In Service Insurance FAQs

How much does death in service insurance cost for employers?

Typically 0.3-1% of total payroll. For a 10-employee tech company in London at 4x cover, Drewberry quotes approximately £31.97 per employee per month. For a 100-employee Yorkshire manufacturer at 2x, approximately £10.03 per month.

Is death in service insurance tax deductible?

Yes. Employer premiums are deductible against corporation tax. At the 25% rate, a £10/month premium effectively costs £7.50 after tax relief.

What is the minimum number of employees for death in service insurance?

Most group life providers require 3-5 employees minimum. For smaller companies, relevant life insurance provides individual policies with no minimum staff requirement.

Should I choose a registered or excepted scheme?

Registered is simpler and suitable for most employers. Excepted schemes are needed as a supplement for high earners whose payouts exceed the LSDBA (£1,073,100). Many employers use both.

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