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Original poster

Death in Service benefit v Life Insurance

20 replies

Bedknobbroomsticks · 09/03/2021 10:43

I'm trying to be more fiscally responsible. I am the main breadwinner in our house and DH is fairly low income. Should I die or no longer be able to work, his earnings aren't enough to cover house payments, bills or childcare if he becomes a single parent. I used to think it was okay as I have death in service benefit from my employer which pays out a lump sum. I'm now thinking I need life insurance as well? Am I right in thinking that this would be prudent as (a) I might get critically ill and also better to get it now whilst I'm in good health, and (b) the DIS lump sum might not be enough to last until the kids are 18 if I pass away now?

OP posts:

IhaveNotBroughtMySpecsWithMe · 09/03/2021 10:46

Wish I had life insurance. Hindsight is a wonderful thing.

Do it.

idontlikealdi · 09/03/2021 10:47

Do you have a mortgage?

I have critical illness and death in service through work, the death in service is 5 x annual salary but wouldn't pay off half the mortgage. I also have life insurance privately.

Also what if you both died in an accident - what provision do you have for the kids?

Have you got a will?

Original poster

Bedknobbroomsticks · 09/03/2021 11:03

Hi - thanks for the reply. I've just realised I have both Death in Service (4 x salary) and Life insurance (3 x salary), which probably wouldn't cover the mortgage if I died tomorrow. So perhaps I need to think about a private life insurance policy as well.

If I ever change jobs, I would need to start again as the policies aren't transferable. I had a minor health scare last year which made me realize if I become ill, it might not be so easy to get affordable life insurance (on top of not being able to work). So I'm wondering now whether I should have two life insurance policies.

We do have a will. DH is the sole beneficiary of my DIS benefit and life insurance so I assumed that would be enough. I think now it wouldn't.

OP posts:

idontlikealdi · 09/03/2021 11:34

I agree it's not enough. have you set out your wishes for your children eg if we both die we have some kind of clause that allows their intended carers to move to a bigger house to accommodate them and also pay for their needs.

It's not the nicest of subjects but so important to think it through properly.

ivfbeenbusy · 09/03/2021 11:50

Funnily enough our situations sound very similar. I am the Main earner by 3x DH who is on a relatively low wage and who certainly couldn't afford our mortgage and to raise our kids if I died

I also have death in service payments (think it's x6 salary)

I decided a couple of weeks ago to also take out life insurance.

I wanted to have enough financial cover to pay off the mortgage on the house for DH/reach the £270k threshold (below this a spouse can apparently Contest a will and I want to leave the bulk of my estate directly to our children without any risk that DH could argue ive not provided enough for him)

Ismellphantoms · 09/03/2021 12:06

My BFF died suddenly one night from a brain haemorrhage. Luckily they had mortgage insurance and life insurance, so her husband, young child and the house were all well cared for financially at an awful time. It's a no brainer (excuse the play on words).

tanguero · 09/03/2021 12:10

Be aware that should you or yours, find yourself in the position of having to claim benefits, then any income from life insurance will likely reduce the amount that you receive. Recent example (BBC website); self-employed widow - and many more - denied assistance from the Government's furlough scheme, because of the income she was receiving from her late husband's life insurance.

Not, necessarily a case for not having life insurance, but be aware of the bigger picture.

FinallyHere · 09/03/2021 20:51

If you have the sort of role that provides DIS and life assurance payments, have you checked your pension for what that might provide for dependents.

PufferFishGoneWrong · 09/03/2021 21:07

I have in death in service benefit, 10x my salary. DH is def not this generous.

We also have life insurance that pays a lump sum.

And also a mortgage reducing insurance, that just pays the mortgage.

Original poster

Bedknobbroomsticks · 10/03/2021 06:51

Wow. Thanks for the helpful responses.

Ivfbeenbusy I had no idea contesting a will on this basis was even possible. The kids are beneficiaries held in trust to some of my estate. I feel I've been fair but I never knew this. I don't think DH would ever do this but you never know and this is good to know.

PufferFishGoneWrong 10x salary is a very generous policy. That's great.

OP posts:

ivfbeenbusy · 10/03/2021 10:57

@Bedknobbroomsticks

I've always been a hope for the best plan for the worst sort of person and have read some horror stories of children being disinherited if the mother dies first and then the father remarries

I have a very large inheritance likely too from parents and that will be protected via trusts

I wouldn't want to leave DH penniless if I died but I don't think he should never work again off the back of my financial assets and the kids get
Less/ nothing. I think ensuring he is mortgage free is a good compromise

Original poster

Bedknobbroomsticks · 10/03/2021 12:21

@ivfbeenbusy Agree with everything you say in this post. I am of the same view in our situation.

OP posts:

milveycrohn · 10/03/2021 12:26

To be honest, I think you need life insurance for both of you (in addition to the death in service benefit).
Think, if your DH died, then you may need to emply extra help with children (depending on ages), childcare, cleaner/housekeeper.
Also, if you lost your job, presumably the death in service benefit would no longer pay.
So, in my view it is best to have a modest life insurance on both lives, to ensure there is some relief in either of you die before the mortgage is paid, or children grown

Original poster

Bedknobbroomsticks · 10/03/2021 19:28

@milveycrohn thanks. I will certainly think about this. I didn't think I needed to as he is very low income and the kids are old enough to attend after school clubs. I'm the primary carer and also responsible for the school run both ways so this wouldn't change if my DH wasn't on the scene. Good point about the DIS benefit no longer paying out if I lost my job. I'd always thought I'd take out life insurance then but makes sense to do it now whilst I'm healthy and premiums are affordable. Thank you.

OP posts:

Outnumbered99 · 11/03/2021 11:58

I would also look at other policies to protect your lifestyle- there are a whole host of issues that could arise that mean you or your DH aren't able to work other than your death.

Very sensible to look at this thoroughly especially while you are relatively young, I wish more people did.

tentative3 · 11/03/2021 15:06

Can anyone recommend a broker for talking through these kinds of things? I don't know what insurances to consider - life, critical illness, income protection etc. And I'm anxious that some policies might have very tight wording to limit payouts etc, so would effectively be worthless.

PalacePaper · 11/03/2021 17:26

I agree with @milveycrohn about looking into life insurance for your DH as well. You may not want to continue working in the same role or the same number of hours if something were to happen to him, so insurance for him would give you flexibility.

DH and I both have DIS and a spouse/children pension, plus some additional life insurance for me as the provision isn't as generous and a reducing policy for both of us which would pay off the mortgage.

Outnumbered99 · 12/03/2021 11:28

I can @tentative3 but it would be the one i work for, so i probably shouldn't, do you have friends or colleagues local to you that you could ask for recommendations?

SciFiScream · 13/03/2021 00:02

We have two polices. One that will pay off the mortgage should anything happen to either of us and another that will pay the surviving spouse (or guardians of the children) £2,000 pcm until the youngest child is 18.

I also have a death in service benefit of 4 times my salary and a health payment plan that would pay out about £25,000 for accidental death of either of us.

Our pensions will go to surviving spouse.

I'd hope with the mortgage paid off and the monthly income my family would be ok.

Muchtoomuchtodo · 14/03/2021 14:34

DH had always said he didn’t need life insurance as he had death in service at work.

For some reason, last January I started feeling very insecure about it all and got us both sorted with life insurance policies. He was made redundant last summer and his new job doesn’t have anywhere near the same perks so I’m very glad that I did.

I would definitely get further advice.

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