Many employers in the UK offer life insurance as part of their benefits package, often called death in service cover. It’s a valuable perk, especially when it comes at no extra cost to you. But here’s the question: is it enough on its own?
In this guide, we’ll break down how life insurance through work works, how much cover you actually get, and whether it’s worth getting your own policy alongside it. If you’re relying on workplace life cover to protect your family, it’s important to know the full picture.
What is the death in service benefit?
Death in service is a type of life insurance provided by your employer. If you pass away while employed by the company, a lump sum is paid to your nominated beneficiary (usually your spouse, partner, or children).
The payout is typically a multiple of your annual salary, commonly between 2 and 4 times, though this can vary.
Do I need to die at work for it to pay out?
This is a common misunderstanding, but you don’t need to be physically at work or die in a work-related incident. As long as you’re employed and on the payroll, the policy should still pay out if you pass away.
However, once you leave that job or retire, the cover usually ends. This means if you change jobs, become self-employed, or take time off work, you could lose your life insurance altogether.
Is having life insurance through work enough?
It depends on your situation. For some people, it might be enough to meet short-term needs, but for others, it could leave a big gap.
Here are some key questions to ask:
1. How much money would your family actually need?
The payout from work cover may not stretch very far if you have a mortgage, debts, childcare costs, or simply want to replace your income long-term. A lump sum of 2-4 times your salary might only cover a few years of expenses, less if you have dependents or financial obligations.
2. Do you have other sources of protection?
If you already have personal life insurance, savings, or your partner has cover too, then workplace cover might be enough to top things up. But if it’s your only form of protection, your family could be left short.
3. Will you stay in your job long-term?
Workplace cover is tied to your employment. If you move on, get made redundant, or go self-employed, you’ll lose that benefit. Having your own policy means the cover stays with you, no matter where you work.
Pros of getting life insurance through work
- Free or low-cost – It’s usually provided at no extra cost to you.
- Easy to get – No health checks or medical questions, great if you’ve had issues getting cover before.
- Pays a tax-free lump sum – Helps your loved ones manage financially if the worst happens.
- Good for short-term protection – Ideal while you build up your own financial safety net.
Cons of getting life insurance through work
- It’s not portable – Leave your job, and the cover ends.
- Not always enough – A few times your salary may not cover long-term needs.
- No flexibility – You can’t change the amount or type of cover.
- Limited control – The policy is owned by your employer, not you.
Should I get my own life insurance too?
In most cases, it’s best to have your own life insurance. Think of your work policy as a bonus, not your main protection. Having your own policy means you can:
- Choose exactly how much cover you need
- Lock in low premiums while you’re young and healthy
- Keep the policy even if you switch jobs or stop working
- Add extras like critical illness cover or income protection
There are different types of life insurance to suit different needs.
For example, term life insurance covers you for a set number of years. It’s ideal if you want protection while your children are growing up or during your mortgage term.
On the other hand, life assurance (also known as whole-of-life cover) is designed to pay out whenever you die. It can be useful for estate planning or leaving an inheritance.
Even if you just take out a basic term life policy to run alongside your work cover, it can offer much more security for your loved ones and greater peace of mind for you.
How much cover do I actually need?
Everyone’s situation is different, but a good starting point is to think about the financial support your loved ones would need if you weren’t around.
Ask yourself:
- Would they be able to keep up with mortgage or rent payments?
- Are there outstanding debts that would need clearing?
- How much would it cost to cover everyday living expenses, like food, bills, and childcare?
- Do you want to leave a bit extra as a safety net or help with funeral costs?
Once you’ve got a rough figure in mind, you can then look at what cover you already have through work or savings, and spot any shortfall.
Even if the number seems a bit daunting, don’t worry. A life insurance adviser can help you break it down, so you get the right amount of cover without overpaying.
Can I have both work and personal life insurance?
Of course, In fact, this is quite common. If you pass away, both policies can pay out independently. Your family could receive a payout from your employer’s death in service scheme and a second payout from your own life insurance policy.
What happens if I leave my job?
In most cases, your workplace life insurance ends the day you leave employment. Some employers allow you to convert the policy into a personal one, but this isn’t always available, and premiums may be much higher.
That’s why having your own life insurance is necessary; it gives you long-term cover you can rely on, regardless of your job.
Final thoughts
While having life insurance through work is a great benefit, it’s rarely enough on its own, especially if you have dependents. It’s worth checking the details of your scheme and working out whether the payout would be enough to truly support your family.
For most people, the best approach is to treat your work cover as a helpful top-up and take out a personal policy for full peace of mind.
