What is the death in service benefit from the Royal Mail Group Life Assurance Scheme?
If you are not an active member of a Royal Mail Group pension plan but are covered for life assurance under the Royal Mail Group Life Assurance Scheme, you will be entitled to a total lump sum death in service benefit of two times your annual basic pay. This will be comprised of any lump sum you may be entitled to from a Royal Mail Group pension plan, plus an amount from the Royal Mail Group Life Assurance Scheme to ensure your death in service benefit is two times your annual basic pay.
Please note: If the total lump sum death in service benefits from your other Royal Mail Group pension plans (if applicable) are greater than two times your annual basic pay, there will be no additional payment made from the Royal Mail Group Life Assurance Scheme.
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My death in service pay out is £97k which is kind of deppressing that iam worth so much more dead than alive
Rows of houses all bearing down on me........I can feel their blue hands touching me.......All these things in all positions.........All these things will one day take control..........
Those who are recommending a seperate personal cover for your mortgage are spot on for several reasons. You currently work for Royal Mail and presumably you have no health issues. If you were made redundant say in 2 years time your death in service benefits would cease. In the meantime your health may not be so good and you may either not be able to purchase personal cover or the cost may be unaffordable due to the cost of being a greater risk. Also you will be older and the cost rises with each year.
Death in service benefits are written under a discretionary trust. Although you complete an expression of wish form which provides the trustees with your wish of who you would like to benefit on your death, it is still the decision of the trustees who they will pay the money to and when. In some circumstances this could mean a substantial delay to pay out, and could mean that your family have to continue making mortgage payments until any problems are resolved.
The best way to cover is with your wife proposing the cover on your life and vice versa. This way on either of your deaths, the money can be paid out immediately, as it does not form part of the deceased persons estate. There are thousands of company,s online that can quote and arrange this cover for you.
Having previously worked in the exciting world of Life Assurance, a general rule of thumb is 10 x your salary as a minimum requirement for Life Assurance so if you earn £20K then £200K of Life Assurance should do it plus your 4 x Death in Service.
However, if you're say in your 30's have a mortgage & 2 kids and are the sole breadwinner then how far will £280K (tax free) go to support the family if you die.....20 years perhaps?
seaside53 wrote:However, if you're say in your 30's have a mortgage & 2 kids and are the sole breadwinner then how far will £280K (tax free) go to support the family if you die.....20 years perhaps?
To be fair i think the wife might have "moved on" long before the 20 years is up..
Some other bloke can pay the mortgage then.
wannabeek wrote:Hi there, can anyone give me advice on this situation?
I've recently had a mortgage lender try to give me the hard sell on life insurance to cover the value of my upcoming mortage should I pop my clogs, leaving my wife and young kids in the doo-doo as I'm the only current wage-earner in the family.
His hard-sell and guilt-enducing talk ("think of your youngest son... little A*****.... only 18 months old... no father and sooo many debts to pay..."). This really wound me up and I informed them that Royal Mail has a suitable Death in Service payment for my needs so should the worst happen, my young family will not be cast out onto the street, despite his dire warnings, thank you very much.
I've now tried to find info about what this 'Death in Service' payment actually is without much luck. I vaguely remember reading about it in some of the endless RM literature in the last year or so, soon after I joined the company, but can't find it now.
If it's of any relevance, I'm on a permanent part-time contract, been employed with RM over a year - I'm pretty sure though that I remember reading that the Death in Service payment is something you're eligible for from day one of working for the company.
Any advice or pointers would be appreciated, anything to stop my wife from thinking that that creepy mortgage dude actually had a point - that'd be awful!
If I was told "think of your youngest son... little A*****.... only 18 months old... no father and sooo many debts to pay..." I would point out that's what he says to all his potential customers and ask how much commission he would get for selling such a policy.
Also I would roughly calculate the total cost over many years of such life insurance premiums and realise what could be done with the money instead.
Whatever product you buy there is a commission of some sort or another involved. Ok the guy is pulling on your heart strings and trying to paint a picture of the situation your loved ones could be in if you popped it. However, forget about his commission, you can always buy elsewhere. The fact is the guy has highlighted a problem which has obviously made you think. As for adding up the cost over the lifetime of the plan, that is nonsense. Do we also add up the cost of home insurance and decide that we leave our house to burn down. The cost of protecting a family financially in the event of death is minimal compared to the payout should it happen.
Lincox wrote:Whatever product you buy there is a commission of some sort or another involved. Ok the guy is pulling on your heart strings and trying to paint a picture of the situation your loved ones could be in if you popped it. However, forget about his commission, you can always buy elsewhere. The fact is the guy has highlighted a problem which has obviously made you think. As for adding up the cost over the lifetime of the plan, that is nonsense. Do we also add up the cost of home insurance and decide that we leave our house to burn down. The cost of protecting a family financially in the event of death is minimal compared to the payout should it happen.
"As for adding up the cost over the lifetime of the plan, that is nonsense" - no it's not, and also it's not nonsense to properly consider (a) if you can afford such a policy, (b) how worthwhile the proceeds of such a policy would be, really making more than a temporary difference in the event of death or not and (c) whether such a policy is really necessary, and if you've paid off your mortgage by the age of 30 and the wife's working it's not.
Mantion of "leave our house to burn down" is just silly. Home insurance is widely accepted as essential because just about all of us don't have enough spare money in the bank to pay for rebuilding, replacement of contents and other expenses if the house were to burn down.
So lounge you are happy to cover your goods and chatels/buildings but not the income that pays for these things in the first place. If we consider that over a 20 year period a man with children may need life cover and he earns £22k per year increasing by inflation (if he is lucky) he will probably earn £500,000. This is far more than the average assetts of a man earning this level of salary. I quite agree that his assetts should be protected in the event of fire, flood burglary etc but to consider this as more important than the machine that pays for these is folly.
I think you have to be realistic as well.
It is incredibly naive to believe that the vacuum left behind by your untimely demise will never be filled.
By all means try to provide for your children but only to the point of what's affordable,the odds on anything serious happening to someone by the age of 45-50 when most people's kids are fully grown adults are pretty slim.
Talk of needing £250-500k worth of cover for someone normally earning £22k is absolute nonsense,although i'm sure the other half would love that.
Look at it this way,if you met someone else and left the wife tomorrow...how much would you be prepared to pay to support your wife and children?
It bet it wouldn't be anywhere near £250-£500k so why do you think they would need that if you suddenly keeled over?
Life cover does not have to be a lump sum amount Fish. It can also be a regular monthly/annual income so it would start paying that amount from the date of death to the end of the term. This way it is much cheaper to arrange as there is much less risk to the provider. I am not advocating that the full amount of your income over a twenty year period is necessary. I was comparing what the loss would be to a family compared to the loss of personal possessions. I would be wanting my family to be no better off but most definitely no worse off if I snuffed it.
seaside53 wrote:However, if you're say in your 30's have a mortgage & 2 kids and are the sole breadwinner then how far will £280K (tax free) go to support the family if you die.....20 years perhaps?
To be fair i think the wife might have "moved on" long before the 20 years is up..
Some other bloke can pay the mortgage then.
I think you are right. In addition just how far into the future is a dead person expected to support a family, I don't want to appear mean but you know the family has to move on and support itself.
Lincox wrote:So lounge you are happy to cover your goods and chatels/buildings but not the income that pays for these things in the first place. If we consider that over a 20 year period a man with children may need life cover and he earns £22k per year increasing by inflation (if he is lucky) he will probably earn £500,000. This is far more than the average assetts of a man earning this level of salary. I quite agree that his assetts should be protected in the event of fire, flood burglary etc but to consider this as more important than the machine that pays for these is folly.
As 'fishtank' rightly says any policy has to be affordable.
Circumstances need to be considered too, and what's the sense in getting £500,000 cover if your wife's earning more than you, and quite a few women do earn more than a postman's wage, just as my wife did when I married her ?
And rather than maybe £40 a month on life insurance that might be better spent on an hour down the pub each week which should increase life quality and therefore life expectation too.
Lounge, again you are missing the point. Maybe your wife does earn more than you, but there is more to consider than money should you die. Your wife not be in a fit state to work or might need to give up or reduce hours to take more time with the kids. There is such a lot to consider and the only ones able to do that taking into account their personal circumstances are the ones considering insuring themselves. I dont know where you get the £40 from. Depends on many things, including age, gender, health and term of years. For a young couple this will be considerably cheaper than for someone in their late thirties/fourties assuming they are A1 health.
