Many employers now offer a âdeath-in-serviceâ benefit to workers, which will pay out a fixed amount if you die while you are while employed.
This free payout is usually a multiple of your salary, typically between two and four times your annual wage, and is paid out whether you die while youâre at work or outside of office hours. As long as you are on the payroll, you are covered.
This means if you have an annual salary of ÂŁ40,000 a year, your family could receive a payment of up to ÂŁ160,000 to help them manage financially. In some cases this will be paid directly to your next-of-kin, but it could also be placed in trust after your death.
If youâre unsure what your death-in-service benefit covers, and how it will pay out, talk to your employer.
While this is a benefit which pays out after your death, it is usually not a substitute for a comprehensive life insurance policy. Such policies can include clauses which mean your mortgage will be fully covered in the event of your death, regardless of the amount outstanding. This is not the case with death-in-service benefits.
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