Death in service vs life cover

Many people don’t think they need life insurance because they have death in service cover with their job. The two forms of cover can differ greatly, for example life insurance can be tailored to meet your needs whereas death-in-service often can’t. We explain the differences between life insurance and death in service cover below:

Death in service, provided by an employer

  • Death in service means you'll get a lump sum if you die while employed.
  • Death in service is ordinarily offered free as part of a package from your employer.
  • If you leave the company and don't have an alternative cover, your family could be at risk.
  • Death in service is normally three or four times your annual salary. Schemes can be set up under a discretionary trust, so you can't choose who will receive the benefits in the event of your death.
  • You can't assign your benefits to cover your mortgage.

AA Life Insurance provided by Legal & General

  • When you take out a life insurance policy with the AA you can choose how much cover you need and how long you want to be covered for. The policy will pay out if you die during the length of the policy. It also pays out if you are terminally ill and meet our definition, except in the last 12 months of the policy.
  • You can choose to pay annually or monthly. If you pay annually you'll get a 4% discount.
  • Your cover will continue for the duration you've specified even if you change jobs or stop working, as long as you continue to pay the premiums. In some circumstances, you can even keep the policy if you move abroad (terms and conditions apply).
  • It only costs from £6 a month – your actual premium depends on your needs and circumstances.
  • You can place your policy in trust, allowing you to leave the cash sum to a specific person known as a beneficiary.
  • You choose the policy that meets your needs – it can be used to help cover a mortgage or to help your family maintain their standard of living.
  • You can make changes to our life insurance policies. If you're buying a new home, getting married, entering into a registered civil partnership, or starting a family, you'll be able to increase your chosen sum without providing further medical evidence. Conditions apply.

For more information, please refer to the Key Features document.