Death in Service (DIS)
Death in service is an employee benefit which pays out a tax-free lump sum if at the time of death, you are employed by the company. The pay out is usually between 2-4 times your annual salary. You don’t have to die whilst you are at work or because of a work activity, you just need to be employed by the company.
The tax-free cash from death-in-service can help your dependents manage financially after your death. In some cases, the money is paid into a discretionary trust which means the trustees have the final say who gets the cash.
To ensure your wishes are considered you will need to complete an expression of wishes or a nomination of benefits letter. The tax-free cash cannot be assigned to a mortgage however your family can use the money to pay off a mortgage debt.
Do I need life insurance if I have a DIS scheme?
We advise clients to have a life insurance policy in addition to a death in service scheme. A death in service scheme will roughly pay out 2-4 times your annual salary.
However, a life insurance scheme will pay our roughly 10 times your annual salary therefore your DIS benefits would not be enough to help your dependents in the event of your death. Our clients are advised to take out a life insurance policy to supplement a DIS scheme to make up for any shortfall.
For more information on Corporate Insurance, please contact us.