Death in service insurance

Death in Service Benefit stands out from all other the protection products offered to the business community. It has no obvious business advantage.

Then, why do so many companies arrange DIS?

Firstly, for the directors, it offers a highly tax-efficient way of protecting their families in case of death.

Secondly, for other staff, it represents an attractive employee benefit at marginal cost to the company. Your staff are the essence of your business. Recruiting the best people isn’t always easy – and keeping them can be harder still. Maslow’s work on motivation shows that increasing pay has little or no effect on well-paid staff - but improved employee benefits can significantly boost loyalty and aid recruitment.

DIS complements your Group Personal Pension scheme, bringing the benefits closer to an occupational scheme. Knowing his or her bereaved family would receive from one to four years’ salary, as a tax-free lump sum, is more reassuring than a return of the pension fund – especially to newer staff.

Add the fact that DIS benefit is held in trust for survivors and becomes available very soon after death. Then add the fact that premiums are not treated as a P11D benefit – no tax or NICs payable by the employee. Included in your induction programme, it makes for a powerful statement of how you value your workforce!

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More information on death in service insurance >

More information on death in service insurance

DIS benefits are written in a discretionary trust. This ensures benefits are payable to dependents without passing through the deceased’s estate – no IHT and no probate delays.

For a small or medium enterprise, the company directors are usually the trustees. The provider will usually supply a standard deed, and we will assist you to set up the trust.

To simplify underwriting, most providers set a ‘free cover limit’. Benefits up to the limit require no more than basic underwriting – the provider accepts all insured lives on the same basis.

You can set different levels of benefit for different employees (but be careful to comply with anti-discrimination legislation). For example, it would be permissible to set a higher level of benefit for the directors and senior managers, or for longer serving employees.

Although the contract runs annually, most providers have ways of accommodating staff changes during a policy year – so you can promise a new recruit immediate cover, and you won’t pay a whole year’s premium for someone who retires early in the year.

For the finance director –

Premiums are an allowable business expense
They are generally not taxable as a P11D employee benefit
Payment of premiums by the company is not ‘remuneration’ – unlike a pay increase, it doesn’t attract employer or employee NICs.

Setting up a DIS scheme is easy. Setting up the right scheme for your company and staff requires competent professional advice.

James Ryan Thornhill advises many companies, both locally and further afield, on their DIS and other employee benefit schemes. It’s a continuing relationship: we don’t only help in the initial stages. For example, we actively monitor renewal premiums - negotiating terms or recommending changes of provider if that would secure significant advantage for our corporate client.

Why not ask us for some constructive suggestions?

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