Relevant Life Insurance

Relevant Life Insurance for directors is a highly tax-efficient solution for offering life coverage to an employee or director of a limited company. The policy premiums are paid by the business and are approved by HMRC as a tax-deductible business expense.

What is Relevant Life Insurance?

Relevant Life Insurance is a form of Business Life Insurance designed to offer individual death-in-service benefits to employees. If an insured employee passes away while employed by the business, the policy provides a lump-sum payout to their dependents.

Additionally, the policy offers financial protection by paying out if the insured is diagnosed with a terminal illness.

How Does Relevant Life Insurance Work?

Relevant Life Insurance is available to employees of UK-registered companies, making it unsuitable for self-employed individuals or sole traders.

The policy is established on a "life-of-another" basis, meaning the business owns and pays for the policy while the payout is directed into a trust for the employee's beneficiaries.

Key Features of Relevant Life Insurance

Eligibility and Assessment

• Coverage is tailored to each individual based on their health, lifestyle, and the desired amount of cover.
• The coverage amount is typically calculated as a multiple of the employee's salary.

Premiums

• The business covers the monthly premiums.
• Employers can choose between a fixed sum insured (level cover) or one that increases with inflation. Note that premiums adjust accordingly with inflation-linked cover.

Flexibility When Employment Changes

• If an employee leaves the company, they can transfer the policy to their new employer or assume personal responsibility for it.

This structure allows businesses to provide valuable death-in-service benefits to employees in a tax-efficient way.

Why Consider Relevant Life Insurance?

While Relevant Life Insurance is not legally required, it offers significant advantages for businesses that choose to provide it.

Tax Benefits

• Premiums are treated as a business expense, allowing the company to claim tax relief.
• Neither the employer nor the employee is required to pay National Insurance contributions on the premiums.
• The policy does not count as a P11D benefit.

Attract and Retain Talent

• In competitive industries, offering Relevant Life Insurance can enhance your employee benefits package, making your business more attractive to potential hires and valued staff.

By providing financial security to employees' dependents in a tax-efficient manner, Relevant Life Insurance is a practical and strategic option for forward-thinking businesses.

Our financial advisors evaluate a company's structure, tax obligations, and employee needs to determine whether Relevant Life Insurance aligns with the business's goals. We have access to a range of providers and can recommend policies that offer the best benefits and flexibility for the company and employees.