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Death in Service Payments UKHow the Money Is Paid & to Whom
Understand how death in service payments are made, who decides who gets the money, how quickly it is paid, and whether the payout goes through probate.
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Book a Free ConsultationKey Facts: Death in Service Payments
Understanding how death in service payments are made to your family after a death.
- -Payments are typically made within 5–10 working days of the claim being approved
- -Most schemes pay via a discretionary trust, bypassing probate entirely
- -Trustees have discretion over who receives the payment (guided by your nomination)
- -If no trust exists, the payout may go through probate (6–12 months delay)
- -The payout is usually tax-free if within the LSDBA threshold
- -Death certificate and completed claim form are the minimum requirements
How Are Death in Service Payments Made?
Death in service payments are made by the insurance company to the scheme trustees, who then distribute the money to the deceased employee's nominated beneficiaries. Because most schemes operate through a discretionary trust, the payment bypasses the deceased's estate entirely — meaning no probate and no inheritance tax.
According to ABI data, group life claims acceptance rates exceed 98%, and straightforward claims are typically processed within 5–10 working days. This is significantly faster than personal life insurance claims that go through probate, which can take 6–12 months.
The HMRC July 2025 confirmation that registered scheme benefits remain IHT-exempt from April 2027 provides additional certainty for families.
Who Decides Who Gets the Payment?
In most death in service schemes, the trustees have discretion over who receives the payment. This is actually a feature, not a bug:
Why Trustee Discretion Matters
If the payout were automatically paid to a named person (like a will), it would form part of the deceased's estate for IHT purposes. Trustee discretion keeps it outside the estate, saving potentially 40% inheritance tax on amounts above £325,000.
Your Nomination Form
Although trustees have discretion, they almost always follow the deceased's nomination. This is why completing and updating your nomination form is critical. Ask your HR department for the form if you have not done one.
What If There Is No Nomination?
Without a nomination, trustees must investigate the deceased's circumstances to decide who should benefit. This causes delays (weeks rather than days) and may not reflect the deceased's wishes.
Disputes
If family members disagree about who should receive the payment, the trustees make the final decision. This is rare but can happen, particularly after divorce or family breakdown.
Is the Payment Included in Probate?
If the death in service scheme is held in a discretionary trust (which is standard for modern schemes), the payment is not included in probate. This means:
- Your family receives the money in days, not months
- The payment is not subject to inheritance tax
- The payment is not affected by debts owed by the deceased's estate
- The payment is separate from any will or intestacy rules
However, if your scheme is not held in trust (rare), or if the payout exceeds the LSDBA threshold on a registered scheme, parts may be taxable. For more on trust structures, see our life insurance in trust guide.
According to the HMRC Trusts Newsletter (August 2025), from April 2027 personal representatives (not pension administrators) will be responsible for reporting death benefits to HMRC where applicable.
Trusted Sources & Further Reading
This death in service payments guide references:
Death In Service Payments FAQs
How quickly are death in service payments made?
Straightforward claims are typically paid within 5-10 working days. This is much faster than personal life insurance through probate, which can take 6-12 months.
Who decides who receives the death in service payment?
The scheme trustees have discretion, but they almost always follow the deceased employee's nomination form. This trustee discretion is what keeps the payout outside the estate for IHT purposes.
Does death in service go through probate?
No, if the scheme is held in a discretionary trust (standard for modern schemes). The payment goes directly to beneficiaries, bypassing probate, the deceased's estate, and any debts.
What documents are needed to claim death in service?
Minimum requirements: a death certificate and a completed claim form (provided by the employer or insurer). The insurer may also request medical records or a coroner's report for non-natural deaths.
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