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Do employer life insurance policies provide enough cover?

life, insurance, life insuranceMany people believe they don’t need to buy life insurance because their employer gives them cover. Matthew Lloyd,'s head of life insurance & mortgages, looks at what you may want to consider with one of these policies. 

Q: I have life insurance through my employer. That means I don’t need to take out my own cover, doesn’t it? 

A: Company-sponsored life insurance, or “death in service” benefit as it is widely known, is often provided by employers as part of an overall employment package and is usually free. 

If you do have this cover, you’ll need to check whether the payout would be enough to provide your family with the financial security you would want for them if they had to manage without your income. 

Q: How much cover is my death-in-service policy likely to provide? 

A. You’ll need to check the amount with your employer, but death in service will usually be three or four times your annual salary.

If this is not sufficient to cover your existing debts, such as your mortgage and other loans, and replace your income in the long term, you should consider taking out additional life cover. 

You also need to be aware that should your employment cease, the life insurance cover will also stop so make sure you are prepared for what to do should this happen. It’s worth bearing in mind that, generally speaking, life insurance premiums rise with age, so it may be worth having additional cover in place for extra security if you can afford to.

For more on life insurance see our articles:  Life insurance: Do I need it?  and Llife insurance tips for new parents.