Death in service...

[irocfan]

just out of curiosity... someone is medically retired due to an event whilst at wor is simple enough - if they subsequently die from the same event would that be classed as death in service and therekore liable for the death in service benefit or would the fact that they've been retired over-ride the d.i.s.?

For example someone is medically retired due to cancer but before the year is out they die due to the cancer (in other words the condition that forced the retirement), would the dependents get death in service or 'just' the pension?

[Ransoman]

irocfan said:

just out of curiosity... someone is medically retired due to an event whilst at wor is simple enough - if they subsequently die from the same event would that be classed as death in service and therekore liable for the death in service benefit or would the fact that they've been retired over-ride the d.i.s.?

For example someone is medically retired due to cancer but before the year is out they die due to the cancer (in other words the condition that forced the retirement), would the dependents get death in service or 'just' the pension?

Not sure on that specific circumstance but a close friend's mother died of cancer (36 hours after diagnoses) and they received a death in service payment. She was on normal sick leave at the time.

[Countdown]

irocfan said:

just out of curiosity... someone is medically retired due to an event whilst at wor is simple enough - if they subsequently die from the same event would that be classed as death in service and therekore liable for the death in service benefit or would the fact that they've been retired over-ride the d.i.s.?

For example someone is medically retired due to cancer but before the year is out they die due to the cancer (in other words the condition that forced the retirement), would the dependents get death in service or 'just' the pension?

If this is a public sector DB scheme then when they retired they will have received a lump sum plus the commencement of their ER pension. At that point they are no longer "in service". If they die whilst still an Employee then (usually) their dependant will get 3-6 months salary, lump sum, and a dependants pension.

they don't get both the ER payments AND the Death In Service. (because they're either retired or they're In service)

[TwigtheWonderkid]

DIS does not pay out if you die after you've left the firm's service, even if you die from the illness that forced you to leave (or be let go).

That's why DIS cover is quite cheap for employers to buy, and why you should never rely on it as part of your life insurance portfolio. Just treat it as a bonus if your family receive it.

It's great for fatal car crashes, brain haemorrhages and heart attacks. It's useless for long drawn out cancers and other things that take a while to kill you.

[Boylston]

Likewise on employer provided critical illness cover. Having a malignant tumor removed and two consultants state it was malignant isn't enough. Apparently it needs to be 'invasive' as well so attempting to get that challenged.

These employee benefits are very well 'defined' so it take a fair bit of luck to fall inside the terms.

Simon

[greygoose]

If you take medical retirement then you won't get the Death in Service payment, a woman on my team was diagnosed with terminal cancer and we had to work out whether it was better for her children if she stayed at work or went for medical retirement.

[edc]

Check the policy booklet. They are all different.

[Countdown]

anonymous said:

[redacted]

I have to say that seems a bit odd. For DIS companies tend to have insurance policies so any payout is (or should be) fully covered. Whereas if anybody is retired on grounds of Ill Health they will normally get additional years of service added to their pension which will be an additional cost to the Employer.

Completely O/T - I remember one guy (back in the 1980's) who was awarded Ill Health ER in his 50's. A few years later he came back to work for the same employer and then claimed IHER a second time. Not only that, his wife was 25 years younger than him and she had dependants from a previous marriage so when he passed away she got a spouse's pension for life and her kids got dependants pension until they were 18.

[spikeyhead]

Back in the 80s, one place I worked at paid out if you died on the premises.

At least one person was carried onto the street to die when they probably shouldn't have been moved.

[edc]

Countdown said:

anonymous said:

[redacted]

I have to say that seems a bit odd. For DIS companies tend to have insurance policies so any payout is (or should be) fully covered. Whereas if anybody is retired on grounds of Ill Health they will normally get additional years of service added to their pension which will be an additional cost to the Employer.

Completely O/T - I remember one guy (back in the 1980's) who was awarded Ill Health ER in his 50's. A few years later he came back to work for the same employer and then claimed IHER a second time. Not only that, his wife was 25 years younger than him and she had dependants from a previous marriage so when he passed away she got a spouse's pension for life and her kids got dependants pension until they were 18.

I'm not sure why this would be surprising. If the ill employee has a long term condition or something degenerative or their illness prevents or restricts them doing the job, then guess what the company ends up making a dismissal. Ultimately, if an employee cannot perform the work or is absent long term and cannot perform the work then the company doesn't keep them on paying a salary and needs somebody else to do the work. A bit brutal perhaps but a workplace isn't a hospice continuing to pay salary until an insurance policy pays out when they eventually pass.

[Pit Pony]

edc said:

I'm not sure why this would be surprising. If the ill employee has a long term condition or something degenerative or their illness prevents or restricts them doing the job, then guess what the company ends up making a dismissal. Ultimately, if an employee cannot perform the work or is absent long term and cannot perform the work then the company doesn't keep them on paying a salary and needs somebody else to do the work. A bit brutal perhaps but a workplace isn't a hospice continuing to pay salary until an insurance policy pays out when they eventually pass.

And yet is there a cost to keeping them.on the Payrole? With a conversion to a zero hours contract obviously.

[Countdown]

edc said:

I'm not sure why this would be surprising. If the ill employee has a long term condition or something degenerative or their illness prevents or restricts them doing the job, then guess what the company ends up making a dismissal. Ultimately, if an employee cannot perform the work or is absent long term and cannot perform the work then the company doesn't keep them on paying a salary and needs somebody else to do the work. A bit brutal perhaps but a workplace isn't a hospice continuing to pay salary until an insurance policy pays out when they eventually pass.

I understand the point about Employers offering IHER if the person isn't able to carry out their duties and is still getting paid (although if they pay SSP only or if OSP has finished they might not care that the person isn't able to come into work, since it's not costing the Employer anything.).

My surprise is around the Advisor suggesting that Employers prefer IHER rather than DIS, because IHER will usually cost the Employer money, whereas DIS doesn't.

[edc]

Countdown said:

I understand the point about Employers offering IHER if the person isn't able to carry out their duties and is still getting paid (although if they pay SSP only or if OSP has finished they might not care that the person isn't able to come into work, since it's not costing the Employer anything.).

My surprise is around the Advisor suggesting that Employers prefer IHER rather than DIS, because IHER will usually cost the Employer money, whereas DIS doesn't.

That is a generalisation though. It will depend on the liability and nature of the funding of those schemes or policies.

[Countdown]

edc said:

Countdown said:

I understand the point about Employers offering IHER if the person isn't able to carry out their duties and is still getting paid (although if they pay SSP only or if OSP has finished they might not care that the person isn't able to come into work, since it's not costing the Employer anything.).

My surprise is around the Advisor suggesting that Employers prefer IHER rather than DIS, because IHER will usually cost the Employer money, whereas DIS doesn't.

That is a generalisation though. It will depend on the liability and nature of the funding of those schemes or policies.

DIS is NIL cost to the Employer. At an absolute best case scenario IHER will be nil cost (assuming the person gets awarded IHER on their 65th birthday or it's a DC scheme). if they get it before then it will either be actuarially reduced or the Employer has to pay a top up.

Point being I can't think of a single situation where IHER would cost less than DIS so i cant see why an Advisor would suggest the more expensive option. I could be wrong but that's my understanding.

[irocfan]

all the responses chaps - something to think on. Better check if if I can get the partner to check relevant paperwork advising that the person has been medically retired or not....

Edited by irocfan on Thursday 25th June 21:03

[edc]

Countdown said:

edc said:

Countdown said:

I understand the point about Employers offering IHER if the person isn't able to carry out their duties and is still getting paid (although if they pay SSP only or if OSP has finished they might not care that the person isn't able to come into work, since it's not costing the Employer anything.).

My surprise is around the Advisor suggesting that Employers prefer IHER rather than DIS, because IHER will usually cost the Employer money, whereas DIS doesn't.

That is a generalisation though. It will depend on the liability and nature of the funding of those schemes or policies.

DIS is NIL cost to the Employer. At an absolute best case scenario IHER will be nil cost (assuming the person gets awarded IHER on their 65th birthday or it's a DC scheme). if they get it before then it will either be actuarially reduced or the Employer has to pay a top up.

Point being I can't think of a single situation where IHER would cost less than DIS so i cant see why an Advisor would suggest the more expensive option. I could be wrong but that's my understanding.

Again it depends but neither of these are nil cost to the company. The policies like any insurance based policy will have different benefit levels. Some companies have a critical illness policy and some don't. Salary caps of benefit/payment caps can apply. For example the one I purchase for a company is from memory for life assurance 4 X salary capped at £1.5million.
I guess it is also possible to have a trust based scheme just as you can for health cover.

[ralphrj]

Countdown said:

DIS is NIL cost to the Employer.

The cost of an individual claim may be nil at the time but employers provide DIS cover by paying an insurance premium which could increase in the future as a result of the claim.

[Countdown]

ralphrj said:

Countdown said:

DIS is NIL cost to the Employer.

The cost of an individual claim may be nil at the time but employers provide DIS cover by paying an insurance premium which could increase in the future as a result of the claim.

The DIS premium isn't calculated on a claims made basis. You don't get any NCD. For my employer they look at the age profile of the staff and compare it to Actuarial mortality tables, and then use a %age of the payroll (0.1% in our case) to calculate the premium. So for somebody on £5k a month we pay £5 life insurance.

If all your staff are male aged 64 you're going to be paying a lot, and if they're all women aged 19 you'll be paying a lot less. But it won't change from year to year unless the mortality rates for all men aged 64/women aged 19 change.

[TwigtheWonderkid]

anonymous said:

[redacted]

It's the insurer who would pay out, not the company. But almost any firm will look to retire someone who has been off work for 6 months with an illness that isn't going to improve. They are running a business, not a charity.

[ralphrj]

Countdown said:

The DIS premium isn't calculated on a claims made basis.

Interesting, I didn't realise that. We have the option to add additional cover to ours and this year there was a big increase in the cost of this which I had attributed to the unfortunate deaths of some colleagues but I now think might just have been my promotion in the previous year.