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Do I need life insurance if I already have death in service benefit?

There are multiple ways to ensure that if you die, those close to you will be taken care of financially. While this will often come in a form of life insurance, sometimes companies will offer a death in service benefit.

This means that should you pass while in employment, your beneficiary will receive a tax-free, lump sum of cash. Exactly how much this is will depend, but it’s generally between two and four times your salary.

So, if your employer provides this type of perk, is it still worth taking out life insurance?

Even if you have death in service benefit, it’s worth considering whether you need life insurance as well. Firstly, there’s nothing legally stopping you from having both, and doing so can offer an extra level of support. 

It’s also important to remember that the two are slightly different. The most important distinction is that your death in service only runs while you are employed by that company. So, if you feel you need cover and aren’t sure how long you're going to work there, a secondary life insurance policy might be a good idea.

You will also pay more for life insurance the longer you wait to take it out, potentially leaving you in a sticky situation if you opt for a policy later down the line.

You will also want to consider the level of protection that you are offered. As death in service is a multiplication of your salary, this could fall short of what you require. With life insurance, you can set exactly how much you need as a payout.

Essentially, it all boils down to your personal circumstances. While death in service is undeniably a fantastic perk, it has its limitations and is impacted by your changing circumstances. So, if you know you need cover whatever happens, then for peace of mind you should seriously consider taking out life insurance on top of your death in service benefits.

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