Protect your team with Death in Service Cover
Your employees show up every day trusting you to look after them. Death in service cover means that if the worst happens, their families get support, a clear signal that your duty of care extends beyond the workplace. Kota sets this up for you, combining brokerage expertise with automated HRIS sync in one unified system. No manual workarounds.
About
Death in Service cover
What is death in service insurance?
The lump sum paid out is most commonly 2 to 4 times the employee’s annual salary, though some employers offer up to 8 times for senior roles. Payouts are made through a discretionary trust, which keeps the lump sum outside the employee's estate and away from inheritance tax.
You can arrange this policy usually through a group life insurance scheme.
Death in service vs.
group life insurance
When you arrange death in service cover for your team, the underlying product is a group life insurance policy.
Insurers and brokers use “group life insurance” as the product name when underwriting and pricing the policy. HR teams and employers tend to use “death in service” in the workplace.
Why offer Death in Service Cover?
Hire and keep the best talent
- Show that you take employee wellbeing seriously
- Demonstrate long-term commitment to employees and their families
- Make competitive offers against larger, established employers
Demonstrate duty of care
- Provide financial security for employees' families
- Show that your duty of care extends beyond the workplace
- Strengthen trust between you and your employees in a way that perks and discounts rarely do
Reduce your tax bill
- Generally deductible as a business expense, reducing tax bills
- Kept outside of inheritance tax
- Not treated as a benefit in kind. No P11D reporting required for employees
Protect your team within budget
- Group pricing is often a fraction of what individuals would pay
- Younger, desk-based workforces attract lower premiums
- Cover scales with your headcount
How to set up
Death in Service Cover
Here's what each stage involves:
Decide how much
cover to offer
Your starting point is choosing a salary multiple. Many UK employers offer between 2 and 4 times an employee's annual salary, with 4 being the most common. You'll also need to decide whether cover applies from day one or after a probation period, and whether all employees are included or only certain groups.
Source quotes from insurers
Once you've settled on a cover level, you or your broker share basic workforce data with insurers. They use this information to assess the risk profile of your group and return a premium quote. You don't need individual employee names at this stage.
Get employees on cover
Enrolment follows once you've selected a provider. Most insurers will cover employees up to a free cover limit without requiring individual medical underwriting. Above that threshold, employees may need to provide medical evidence.
Update the policy as
headcount changes
Every time someone joins or leaves, the policy needs to reflect it. New starters should be added promptly and leavers need to be removed just as quickly. This is where manual admin tends to build up, and where errors are most likely to occur. You can end up paying premiums for ex-employees.
Pay claims to beneficiaries
When an employee dies, the insurer pays a tax-free lump sum directly to the nominated beneficiary. As the employer, your main role at this stage is notifying the insurer and providing confirmation of employment. The claims process is handled by the insurer from there.
Set up death in service cover in minutes
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Who offers
death in service insurance?
How much does
Death in Service Cover cost?
Death in service cover is priced per group, not per individual. That’s what makes it so cost-effective compared to personal life insurance. Insurers assess the overall risk profile of your workforce and charge a single annual premium based on that. The premium is usually expressed as a percentage of the total sum assured across your group.
Several factors influence where your quote lands:
The age profile of your workforce
But if your workforce is predominantly younger, that tends to translate to more competitive premiums. Younger, desk-based teams are among the lowest-risk groups insurers price.
How much cover you choose to offer
A 4 multiple is the most common starting point among UK employers. Some go higher for senior roles or as a retention lever.
If budget is a concern, some employers start at 2 or 3 multiple, with the option to increase at renewal.
The size of your team
That’s because the more employees you cover, the more risk is spread across the group, which generally brings the per-head cost down.
Many providers require a minimum of three to five employees to qualify for a group scheme.
The nature of your work
Desk-based industries like tech, professional services, and SaaS sit at the lower end of the risk scale.
If your workforce includes both desk-based and manual roles, insurers tend to rate the group based on the predominant roles.
Example scenario
A tech company with 50 employees, an average salary of £45,000, and 4 multiple cover has a total sum assured of £9,000,000.
At a typical market rate of 0.15–0.30% of the sum assured, the annual premium would range from £13,500 to £27,000. Roughly £22–45 per employee per month.
Tax implications of
Death in Service Insurance
United Kingdom
Employer Treatment
Employee Treatment
Inheritance Tax Note
Ireland
Employer Treatment
Employee Treatment
Revenue / CAT Notes
What you need to set up
Death in Service Cover
Setting up group critical illness cover usually requires a few key details about your workforce and the level of protection you want to offer. Insurers use this information to assess risk and provide quotes for your company.
You’ll need to provide:
Required empoyee data
Salary structure
Eligibility rules
Cover level decision
Beneficiary nomination
How Kota handles
death in service benefits
If you're managing death in service manually, you're likely coordinating between a broker, a benefits platform, and your HRIS. That means handling broker communications, dealing with the back and forth, and updating joiners and leavers. Kota replaces all that manual benefits admin with a single unified system.
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Frequently asked questions
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No. It's a voluntary benefit - one you choose to offer as part of your package, not one you're legally obligated to provide. That said, it has become a widely expected part of a competitive offer. For scaling companies competing for talent against larger, more established businesses, not offering it is increasingly a disadvantage.
No. For UK employers, premiums are treated as an allowable business expense and you can deduct them from your taxable profits. The cover itself is not a benefit in kind, so employees pay no additional income tax as a result of being covered.In Ireland, the same broad treatment applies, though CAT may apply to beneficiaries other than spouses or civil partners depending on the amount received.
Yes, though it's uncommon. Since scheme trustees hold discretion over who receives the payout, a beneficiary can challenge the decision if they believe the trustees failed to consider relevant information or acted improperly. Family members not named on the nomination form can also make representations to trustees. The most common cause of disputes is an outdated nomination form, which is why keeping it current matters.
Most claims are straightforward, but there are a few situations where an insurer may decline to pay out. These instances usually involve self-inflicted injury, participation in criminal activity, or undisclosed pre-existing medical conditions.
Most policies also have an age limit for cover, usually between 65 and 70. It's worth reading your policy terms carefully before committing, and flagging to any employees whose sum assured exceeds the free cover limit that they may need to provide medical evidence before cover begins.
No. Following the October 2024 Budget, there was uncertainty about whether death in service benefits would be caught by the inheritance tax changes coming into effect in April 2027. HMRC has since confirmed that death in service benefits are specifically excluded. They will remain inheritance tax-free even after April 2027 when other pension death benefits become taxable.
Most group life schemes are set up as registered schemes linked to pension rules. The alternative is an excepted scheme, which sits outside pension legislation entirely. The distinction matters if you have higher-earning employees whose combined pension could approach the Lump Sum and Death Benefit Allowance, currently £1,073,100 for 2025/26. Payouts from a registered scheme count towards that limit, whereas payouts from an excepted scheme don't. If any of this is a concern for your workforce, it's worth discussing with your broker.
Benefits you and your employees will love using
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