Relevant Life Insurance

Tax-efficient life cover paid by the business

Allows your company to pay for life insurance premiums in a tax-efficient way, rather than funding cover personally.

Avoids benefit-in-kind tax for directors

Premiums are not treated as a personal benefit, so directors and employees don’t face extra income tax.

Provides a death-in-service benefit

Pays a tax-free lump sum to beneficiaries if the insured director or employee dies during the policy term.

Reduces National Insurance liabilities

Relevant Life premiums are not subject to employer or employee National Insurance contributions.

Ideal for directors and small businesses

Designed for limited companies that don’t qualify for, or don’t want, a full group life scheme.

Protects families without inheritance tax

Policy payouts are usually made via a trust, helping keep the benefit outside the insured’s estate.

What is Relevant Life Insurance?

Relevant Life Insurance is an employer-funded life insurance policy that provides a death-in-service benefit for employees, including company directors. It allows a business to pay for life cover in a tax-efficient way, with the payout made to beneficiaries if the insured person dies during the policy term.

Who can be covered by a Relevant Life policy?

Relevant Life Insurance is suitable for company directors, contractors operating through a limited company, and employees of small businesses. It is often used by companies that do not have enough staff to set up a group life scheme.

How does Relevant Life Insurance work?

The company takes out the policy and pays the premiums on behalf of the employee or director. If the insured person dies while the policy is in place, a tax-free lump sum is paid to their beneficiaries through a discretionary trust.

What are the tax benefits of Relevant Life Insurance?

Premiums are usually treated as an allowable business expense and are not classed as a benefit-in-kind. This means there is typically no income tax or National Insurance to pay on the premiums, and the payout is usually free from inheritance tax.

How much cover can a Relevant Life policy provide?

The amount of cover depends on individual circumstances, including earnings and the level of protection required. A Broadbench adviser can help determine an appropriate level of cover based on your situation.

Is the payout from Relevant Life Insurance taxable?

If set up correctly, the policy payout is paid through a discretionary trust and is usually free from income tax and inheritance tax, providing financial protection for the insured person’s beneficiaries.