Death in Service Benefits – How Should You Choose Them?

If you are someone, looking to create a death in service benefit for the employees of your company or for that matter if you yourself are an employee for whom his employer is mulling a death in service benefit, then there are certain things that you should know of. It is not really correct to invest in insurance or for that matter in any other financial deal without conducting proper research on the same. You might base your decision to invest, on hearsay but in that case you might as well end up regretting the same.

So here are certain steps that must be followed before availing the death in service benefit:

  • Knowing about the benefits in detail
  • Weighing your needs properly and see whether the features of the benefits are in compliance with your needs or not
  • Learning about the pros— but having a firm grip over its cons as well, so as to ensure that one negative quality is not nullifying all the good sides of the policy
  • Consulting a number of websites before choosing the preferred insurance carrier for yourself

Knowing about the death in service benefits

If your employer is offering you this benefit it means that a lump sum will be paid to your family in the event of your death. Here, it will be your duty to find out whether the amount of money provided as the payout is sufficient to sail your family through the difficult times or not. It will also be helpful if you bolster due know how by knowing a little more:

Most of the times the death in service benefits are attached to the pension funds earned by you— However if you are a high earning individual of a small company with substantial pension funds, whereby the employer has a relevant life policy in place in the form of a death in service benefit, you can keep the policy separate from your pension funds

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If you leave the present job or are sacked then there are very little chances that the death in service benefit will be carried over to the next job until and unless you’re new employer agrees to pay for such benefits

Most of the times the benefits are payable through a discretionary trust

As an employer you must know that if you have a small company consisting of a little more than or equal to 5 employees then you can seek a relevant life insurance whereby you will be able to get substantial tax benefits— here the premiums will not be taxed as they are not considered to be benefits in kind

Death in Service Benefits Vs Life Insurance

Another thing that you must do before opting for the death in service benefits is, compare it with the traditional life insurance. As against the death in service benefit, the traditional life insurance does not expire with your change of job or retirement. Here the benefits are paid out by the insurance company itself.

Before winding up, it must be mentioned that as an employee you can always opt for a death in service benefit. But it would be good if you yourself invest in conventional life insurance policy.

On the other hand, as an employer you can avail the death in service benefits for your employees and receive substantial tax benefits. But you must not take it only as a tax avoidance measure. You must make sure that your employees are duly benefitted as well.

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