Which of the following statements about death-in-service benefits is true?

• A. They are paid as a monthly pension after death
• B. They are a lump sum paid upon death while in service to beneficiaries
• C. They are paid only to the employee's spouse
• D. They are not linked to the pension fund

Answer: (B)

Death-in-service benefits are designed to provide immediate financial protection to the employee’s beneficiaries if death occurs while still employed. The hallmark is a one-off lump-sum payment made to named beneficiaries, often calculated as a multiple of salary, and funded by the pension scheme. Some schemes may also provide a dependant’s or spouse pension, but the key feature is the lump-sum payout rather than a regular monthly pension after death. The lump-sum nature and the fact it’s paid to beneficiaries (not solely to a spouse) distinguish this benefit from other types of pension payments, and it is indeed linked to the pension fund that supports the scheme.