Although you may get death-in-service cover from your employer (usually offered free as part of a package), life insurance offers different benefits; for instance, you can tailor it to meet your needs whereas you often can't do that with death-in-service cover.
Here's a quick comparison.
Life insurance (provided by Legal & General):
- You choose how much cover you need, and how long you want to be covered for, when you take out a life insurance policy with us
- 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 a registered civil partnership, or starting a family, you'll be able to increase your chosen sum without providing further medical evidence (conditions apply)
Death in service cover (provided by an employer):
- Makes sure that your family will get a lump sum if you die while employed
- 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'll receive the benefits if you die
- You can't assign your benefits to cover your mortgage
Read the Key features (PDF) document for more information.