Death in service benefits
Technically, death in service cheques should be paid to the employer or the trustees of the pension scheme. The employer/trustees have promised benefits on death: they then insure that benefit to make sure they can cover the cost if it arises. The insurance contract is technically a private matter between the insurer and the employer, and the employee is not a party. However, it is common for the insurers to make cheques payable directly to the beneficiaries to save hassle.
The employer/trustees have to meet their obligations for death benefits whether or not they have received anything from the insurer. If they do not pay benefits, they can be sued - though the Pensions Ombudsman would be quicker and cheaper. Joe Duffy might be even faster.
There is nothing to stop an employer insuring a larger amount than promised by the pension scheme, if the insurance company is willing and the employer pays the premium. One possible reason for this might be to cover them for the effect of the loss to the business if a key employee dies. The employee's beneficiaries are entitled to the amount promised under the pension scheme: if the amount insured is higher (or lower) this does not affect their rights.
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