Tax-Efficient Protection for Directors & Employees
Empower Your Business with Smart, Tax-Savvy Relevant Life Cover
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Why Choose Relevant Life Insurance?
Relevant Life Insurance is a powerful solution for UK business owners, directors, and high-earning employees seeking personal life cover—paid for by the company, not from taxed income. It offers a tax-efficient way to provide death-in-service benefits without the need for a group scheme.
Tax-Efficient Premiums
- Premiums are paid by the employer and are usually considered an allowable business expense, reducing corporation tax liability.
- Employees pay no National Insurance or income tax on the benefit, as it's not treated as a benefit-in-kind.
Significant Cost Savings
- Directors can save up to 50% on life insurance costs by having the company pay for the policy.
- Compared to personal life insurance, Relevant Life policies can be more cost-effective due to tax savings.
Inheritance Tax Advantages
Policies are typically written into a discretionary trust, ensuring that payouts are usually free from inheritance tax and not subject to probate delays.
Flexibility and Portability
Cover can be tailored to individual needs, and policies can often be transferred if an employee changes jobs.
Ideal for Small Businesses
Provides a valuable employee benefit without the complexities of setting up a group life scheme.
Please note: Tax treatment depends on individual circumstances and may be subject to change.
Who Can Benefit?
- Company directors and salaried employees seeking tax-efficient life cover.
- Small businesses wanting to offer competitive benefits to attract and retain talent.
- High-earners concerned about exceeding pension lifetime allowances.
How It Works
1. Policy Setup
The employer takes out a policy on the employee's life.
2. Trust Arrangement
The policy is written into a discretionary trust, ensuring tax-efficient payouts.
3. Premium Payments
The employer pays the premiums, which are usually tax-deductible.
4. Payout
In the event of the employee's death or terminal illness diagnosis, the trust pays a lump sum to the beneficiaries.
Take our Quick QuizWatch Our Explainer Video
We've put together a quick 2-minute video to provide an overview of how Relevant Life Insurance offers a tax efficient death-in-service benefit.
Is Your Life Cover Costing You More Than It Should?
A Quick Quiz for UK Company Directors
If you’re paying for personal life insurance out of your own post-tax income, you could be missing a major tax-saving opportunity.
Relevant Life Insurance allows your business to pay the premiums, while your family gets a tax-free payout. It’s like having death-in-service benefits from your own company, and it’s fully HMRC-compliant.
Answer only 5 questions to see if it’s worth a conversation.
Get the facts
Download our guide to Relevant Life Insurance to find out more.
Get the guideFAQs
Am I eligible to take out a Relevant Life Insurance policy?
You must have a limited company to benefit from the tax savings that a relevant life insurance policy offers. If you do not have a limited company then standard Life Insurance will offer you the protection you need.
Do I get any money back if I don't die before the Relevant Life Insurance policy term ends?
No. There’s no cash value at any time. Just like standard Life Insurance at the end of your Relevant Life Insurance policy term you stop making payments and your cover ends.
Can my mortgage be covered with Relevant Life Insurance?
If you have an interest-only mortgage, your outstanding mortgage loan stays the same until you repay it at the end of the mortgage term. Level Relevant Life Insurance could cover this type of mortgage.
How does Relevant Life Insurance work? What do I need to know?
Like standard Life Insurance, it provides your loved ones with a large tax-free, one-off payment, or monthly payments if you pass away. It can be used to pay the mortgage off or help your family with living expenses. You are covered only for the duration (term) of the policy and cover only lasts while you keep up monthly premiums. Monthly payments can be reduced by combining this with a Critical Illness policy.
The key difference between Life Insurance and Relevant Life Insurance is that with Relevant Life Insurance the cost of the premiums is moved from your own pocket to your company expenses. This saves you tax and reduces the cost of your monthly premiums.
Additionally, this is not treated as a benefit-in-kind; the premium is not included as a P11D benefit, nor are premiums subject to National Insurance payments for the employer or employee.
There is significant tax relief with a Relevant Life plan and your business can claim Corporation Tax Relief on the premiums. Plus, the payout itself is tax-free.
What is Terminal Illness Cover?
Terminal Illness Cover will pay out when you contract an illness/ disease that has no known cure or has progressed to a point where it cannot be cured, and you aren’t expected to live longer than 12 months.
What's the difference between Relevant Life Insurance and Over 50s protection?
The main difference is that Relevant Life Insurance is a tax-efficient term policy, so it covers you for a specific amount of time, while over-50 life insurance is a whole of life policy, so it covers you for the rest of your life.
Typically to take out a Relevant Life Insurance policy you need to be aged between 18 and 77 to apply, and your coverage stops at the end of the policy term. You choose a cover amount, and if you want your cover to remain the same, be protected from the effects of inflation, or decrease over time broadly in line with a repayment mortgage or loan. You can take out a single or joint life insurance policy.
If you’re not sure which one might be right for you, speak to a Broadbench financial adviser.
What’s the difference between Relevant Life and Life Insurance?
Life Insurance is cover that you pay for with your own money. However, if you are set up as a limited company, you can pay for your Life Insurance through your business, as a tax-deductible expense, saving you 20%. This is known as Relevant Life Insurance.
How can I set up a Relevant Life Insurance policy?
If you’re looking to set up your Life Insurance, our advisers can help you find the right policy for you and your family. Get in touch.