Life Insurance versus Death-in-Service

Many people believe that if you have death-in-service cover then you don’t need life insurance. This is a common fallacy as death-in-service doesn’t actually offer the same amount of financial protection as a life insurance policy.

What is death-in-service?

Death in service is usually provided by your employer and the cover is typically x4 the basic salary. In case of death during employment, the employee would receive a lump sum amount.

However, it is important to note that if you leave the current employer then the cover will cease to exist. To add, the cover is typically limited to x4 your salary, so if you wish to increase your cover you will need to get life insurance.

How does life insurance work?

Life insurance covers your family financially by paying a lump sum amount which can be used at their discretion. The different factors which can be altered are listed below

• Level Term Assurance or Mortgage Term Assurance
• The amount of coverage and the term of the policy
• Add-ons can be included such as critical illness cover and waiver of premium.

Should you decide to change jobs/ retire, your cover will continue to exist until the term comes to an end or if you pass away and therefore file a claim. To add, you can put your life insurance in-trust so that the claim amount goes directly to your family.

Kevin Patterson