Many Expats often make the mistake of believing that death in service benefits they have with their company and life insurance are the same thing, This however, is not the case. Death in service is an insurance offered through your employer, while life insurance is available through an insurer. Often the two types of cover differ significantly in terms of the benefits they can offer.
The major problem with the death in service benefits is that in essence its just a personal accident insurance. If we look at the scenarios that a life company will pay in the event of a claim, the majority of the cases likely to be after a period of illness. But if you look at the cover that death in service offers then you are unlikely to be employed as the firm has no obligation to keep you on after the a period of illness.
The expat employee contract will generally have a clause that entitles the employer to stop employing you after 3 months if you're too ill to work. If after this period you die then the death in service benefits cease to exist.
With death in service, if you were to move or lose your job, through redundancy or dismissal for example, any death in service benefits will be lost. Replacing this level of cover may not be easy, particularly if you were in poorer health, which could then leave your family at risk should anything happen to you. For this very reason, you should be aware that death in service insurance may not be sufficient to cover all of your needs, so it may be worthwhile to consider additional cover in the form of life insurance.
What is death in service?
Death in service insurance pays out a lump sum to your family, usually around three or four times your annual salary if you die while working for the company offering the insurance policy. Many employees are provided with death in service benefits through an insurance scheme set up by their employer. The cover is normally offered free of charge as part of a benefits package and goes some way towards protecting your loved ones financially should you die whilst employed. However, if you leave your job, get made redundant or are dismissed, the cover ends, which could then leave your family at risk financially if you were to die.
What is life insurance?
Life insurance pays out either a lump sum or an income if you die. You might want it to provide your family with an income to live on or to cover a specific regular expense. Or you might want them to receive a lump sum which they can then invest/use for income or to pay for something specific such as an outstanding mortgage or inheritance tax bill
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