Business Services

Death In Service

We are able to help businesses in many ways, including offering a Death In Service package for employees.

What is a Death in Service Scheme?

A Death in Service scheme is a type of life insurance that provides a lump sum payment to an employee’s family or beneficiaries if the employee dies while they are still employed by the company. Typically, this payment is a multiple of the employee’s salary (often 2 to 4 times their annual earnings) and is offered as part of a wider benefits package.

Key Benefits for Businesses

1. Improved Employee Retention and Attraction

Offering a Death in Service scheme can significantly enhance your benefits package, helping to attract top talent and retain existing staff. In fact, studies show that companies offering comprehensive benefits, including life cover, see up to a 25% improvement in employee retention compared to those without such schemes. Employees are more likely to stay with employers who show they care about their long-term wellbeing and that of their families.

2. Boosts Employee Morale

Providing comprehensive employee benefits, including a Death in Service scheme, shows that you care about the wellbeing of your staff and their families. This can improve morale, with data suggesting that businesses offering robust benefits see a 15-20% increase in employee engagement and productivity.

3. Cost-Effective Benefit

Compared to other employee benefits, a Death in Service scheme is relatively inexpensive for employers. It allows businesses to offer meaningful support to employees without substantial financial outlay. A small investment in life cover can provide a significant return through improved loyalty and satisfaction.

4. Corporate Social Responsibility

By offering a Death in Service benefit, businesses demonstrate a commitment to supporting the financial security of their employees and their dependents, aligning with wider corporate social responsibility objectives.

Tax Benefits for Businesses

Tax-Deductible Premiums: Premiums paid by businesses towards a Death in Service scheme are typically considered a business expense and therefore can be tax-deductible. This makes it a cost-efficient way to offer employees valuable benefits.
No National Insurance on Benefits: The lump sum payment made to the beneficiaries is not subject to National Insurance contributions, adding to the tax efficiency of offering this benefit.

Tax Benefits for Employees

No Inheritance Tax on Lump Sum: The lump sum paid out under a Death in Service scheme is generally free from inheritance tax as long as it is written into trust. This ensures the full amount reaches the intended beneficiaries without unnecessary delays or deductions.
Tax-Free Payouts: The death benefit is tax-free under current UK law, meaning beneficiaries receive the full lump sum payment without being subject to income tax.

Retention and Recruitment Benefits

In an increasingly competitive job market, offering a Death in Service scheme can be a valuable tool for recruitment and retention. Studies have shown that 47% of employees are more likely to stay with a company that offers comprehensive benefits, including life insurance like Death in Service. Additionally, the availability of such a scheme can help attract high-quality candidates, as it provides peace of mind and financial security for their families. Businesses with strong benefits packages, including Death in Service, are more likely to retain employees for the long term.

The Importance of Using an Independent Financial Adviser

While setting up a Death in Service scheme may seem straightforward, the benefits of consulting an independent financial adviser (IFA) cannot be overstated. Here’s why businesses should consider working with an IFA like Hartey Wealth Management:

1. Tailored Advice: Every business is unique, and so are the needs of its employees. Hartey Wealth Management provides personalised advice, ensuring that the Death in Service scheme is tailored to fit your specific business requirements and goals.

2. Navigating Complex Tax Rules: While there are tax benefits for both employers and employees, navigating the complexities of tax law requires specialist knowledge. Hartey Wealth Management ensures you maximise all potential tax advantages and avoid any pitfalls.

3. Access to the Best Products: As independent advisers, Hartey Wealth Management has access to a wide range of insurance products across the market. This independence allows us to find the best scheme for your business, ensuring value for money while providing the best possible benefits to your employees.

4. Ongoing Support: Setting up a Death in Service scheme is just the first step. Hartey Wealth Management offers ongoing support to ensure your scheme remains effective and compliant with any legal or regulatory changes. This includes regular reviews and adjustments as necessary.

5. Holistic Financial Planning: Hartey Wealth Management doesn’t just help with Death in Service schemes. We offer holistic financial planning, helping both businesses and individuals manage their financial futures more effectively. From pensions and investments to tax planning, our expert advisers are here to guide you every step of the way.

Conclusion

Offering a Death in Service scheme provides numerous benefits for both businesses and employees. It’s a cost-effective way to enhance your employee benefits package, improve retention (up to 25%), and offer financial security to your employees’ families. By working with an independent financial adviser like Hartey Wealth Management, you can ensure the scheme is tailored to your business needs while maximising tax efficiencies and long-term benefits.

For more information or to discuss how we can help your business, contact us.

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