A simples guide

Is employer-provided life insurance enough?

It’s a tough world out there and employers want the best people for the job, so you may have an employee benefits package that your company put together in order to lure you to the role in the first place. And one of those perks might be life insurance and if that’s the case, you might think you’re sorted – but are you? Do you know how much you’re covered for and have you worked out if it’ll actually be enough? Here’s what you need to know.

What does my work life insurance cover?

Sometimes known as a ‘death in service’ payment, it’s a lump sum given to your dependents (or named beneficiary) if you die whilst employed by that company or organisation. The amount that’s paid out will vary according to employer, but you can expect it to be around three or four times your annual salary.


Is employer-provided life insurance enough?

Is my employer life insurance enough?

That depends on how much you’re covered for and how much you think your dependents will need if the worst ever happened. The average salary in the UK at the end of the 2015 tax year was £27,600, if your employer pays out death in service at four times your earnings – that’s £110,400 – is that enough?

Think about what the money will be used for – will it pay off your mortgage or cover any debts you have? And if the kids are still young and you bring home the main income, will your employer life insurance be enough to support your family with childcare and household bills? – Once you’ve added it all up, you might be surprised at just how much you need.

If you find your employer insurance comes up short, you can take out a separate policy to make up the additional amount. Just remember not to double count! e.g if you need £400,000 and your employer covers £200,000 just take out an additional £200,000 in cover.

What else should I consider?

It’s a rare thing nowadays to have a job for life so you should think about what happens if you change jobs. What if your new employer doesn’t offer life insurance? If you do need to take it out at a later stage policies can be more expensive given you are a higher risk.

Or what about if you had to leave your job due to health reasons. If at that point you wanted to take out your own life cover it could be very expensive as the insurance provider would take your medical condition into account. So you may want to consider taking out your own life insurance policy sooner rather than later.

Choosing a policy

Thinking about your own demise is never going to make comfortable reading. But if you’ve got loved ones relying on you, can you (or they) afford not to think about it? A work based life insurance scheme is an easy option to take and of course it’ll certainly help. But the only way you can be sure is to read the small print, and if you find it’s not quite up to scratch – you should probably do something about it.

Which is where we come in, we make searching for life’s necessities easy (because juggling work, home and kids is complicated enough), just tell us what you need and we’ll find it for you. Better still, if you want some reassurance or need to discuss any concerns, you can call our friendly advisors at LifeSearch. Give them a call on 0800 072 1147 and they will guide you through your options. Don’t wait until it’s too late – be prepared and start comparing.

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