The financial services sector pays out an average of 4.63 times salary to a deceased employee's dependants compared with an average of 3.03 times salary in the retail sector, according to a survey commissioned by HR magazine from Punter Southall Health & Protection Consulting (PSHPC).
For an average manager in financial services on a salary of £50,000, this would equate to a £230,000 payout. However, with 6% of death-in-service schemes insuring a multiple of seven times salary or more, dependants of an employee earning £130,000 a year in financial services could find themselves with a £1,000,000 pot.
One financial firm analysed in the research provided a benefit of 14 times salary. In contrast, dependants of a typical £14,000 a year retail employee would get only £42,000.
IT and high-skilled manufacturing are the next most generous industries, paying out multiples of 4.45 and 4.4 respectively, while sales/distribution and charities provide an average of 3.3 and 3.73 multiples of salary.
HR magazine asked PSHPC to mine data from more than 400 corporate clients, covering 110,000 employees, to find out which industries provide the most and least generous death-in-service benefits.
"Typically, in those sectors where employers are competing for talent, such as financial services and legal, there is better life assurance provision," said PSHPC director John Dean.
"Some 5% of our clients provide life assurance benefits of eight times salary and the majority of these operate in the financial services sector."
Many of the least protected staff work in high-risk sectors, such as factories and agriculture, while some industries, in particular those that do not have a strong unionised history, fail to offer any provision at all, Dean added.
Employers in the UK tend to offer higher levels of life assurance than those in other countries, especially the US.
The most common level of life assurance is four times salary, although this varies according to industry and employee grade. Dean said this had risen since pensions legislation in 2006 enabled tax-free payouts of four times salary.
With in-work mortality rates averaging one per 1,000, HR departments in small and medium sized businesses may face only one claim a decade. As a result, the process of managing a death in service may not be well documented and mistakes can creep in, said Dean.
"The HR community just hopes it will all be okay. That's fine in large companies with robust processes, but so often complexity makes the risk to business very high. HR needs to ensure its data and processes are up to date to avoid any delay in paying beneficiaries when they are at their most vulnerable."
