Dealing with the death of an employee is never easy, but the loss is even more profound for their loved ones and family.
While money can’t ease the pain of losing a loved one, if you have a death in service insurance scheme set up for your employees, this can provide some financial support to their loved ones that could help towards paying for the funeral, staying in the family home, or maintaining their current lifestyles.
We’ve created this guide to give you an insight into the claims process and how to claim death in service insurance when an employee passes away.
When can you make a claim?
You may have a valid claim on your death in service scheme if your employee has died while employed by the company and on the payroll at the time of death. The death does not have to occur at work or in a work-related accident.
Who should make the claim?
The employer - as the policyholder the employer needs to submit the death in service insurance claim.
First step – notify your provider of the death
In the sad event of an employee’s passing, you will need to contact your death in service insurance scheme provider and advise them of the death.
You should do this as soon as possible to increase the likelihood of a prompt payout. You'll be asked to fill in a claim form (some providers have an online claim service), which you will then send back to the provider to be assessed by their claim handlers. They will usually keep you updated on the progress of your claim.
Gather some documents
You’ll need to gather some documents to support your claim. Which documents you need will depend on whether your scheme is set up under the provider’s master trust, or your own corporate trust, as well as the complexity of the claim.
Details of what you’ll need will be outlined on your provider’s claim form, but some examples include:
- The completed claim form. Some providers will have an online form you can download.
- The original death certificate, if required.
- Account details of your trust, if using your own corporate trust.
- The deceased’s expression of wish form/nomination of benefit form.
- Death abroad questionnaire. If the death occurred abroad, the provider may require additional information.
If using the provider’s master trust, the trustees may contact the employee’s family directly for more information to help identify the deceased’s dependants and decide who should receive the payout.
This information could include the deceased’s marriage certificate, decree absolute (if divorced), or proof of financial dependency if an unmarried partner exists.
Who gets death in service benefit?
If the claim is accepted, payout will be made to the trustees of the scheme. This will be the trustees named in the provider’s master trust or your own corporate trust, depending on what you chose when setting up the scheme.
The trustees will decide who should receive the lump sum payment. They will consider the employee’s expression of wish form if one has previously been completed by the deceased.
If they have reason to believe the expression of wish form is out of date, one hasn’t been completed, or is missing, further information may be required to help identify the rightful beneficiary.
How long does it take for death in service to pay out?
The length of time it will take for the beneficiary to receive a death in service payout will depend on the complexity of the case and whether the trustee has all the necessary paperwork. Usually, the process is complete within 30 days.
Why death in service payment may be delayed
There are some instances where a claim may be delayed. Reasons for delay can include missing or incomplete paperwork and inquisition into the death.
When setting up your scheme, your employees will have an opportunity to complete paperwork to detail who they wish to receive a death in service payout. This is known an expression of wish form, or a nomination of benefit form.
Upon death of an employee, if this paperwork can't be located, or the beneficiary named on the expression of wish form appears no longer suitable, then payment may be delayed whilst it's determined who the payout should be made to.
Secondly, a death in service payout may be delayed if there's an inquisition into the death.
If the death is reported to a coroner, the cause of death tends to be determined soon after by a post-mortem. In some instances, the coroner may hold an inquest to further investigate the cause of death, if it was unexpected or seems suspicious, for example. In this instance, the death in service payout may be delayed until the inquisition is complete.
Can a death in service claim be rejected?
Most death in service insurance claims are accepted. In fact, research by Group Risk Development (Grid) has revealed the UK group risk industry paid out total benefits of £1.37 billion in death in service insurance policy claims in 2020.
However, there are some rare instances where your claim may be denied. For example, if the employee is no longer on the payroll at the time of death or has exceeded the age limit chosen when the scheme was set up, the provider will not accept the claim.