- Mon - Sun: 8:00am - 8:00pm
Relax, our advice is free
If you’re a company director or business owner, a relevant life insurance policy offers one of the most tax efficient ways to provide life cover for yourself or your employees. Unlike a standard personal life insurance policy, a relevant life plan is an employer-funded life cover arrangement.
Your company takes out the policy and pays the premiums on behalf of an employee and because it qualifies as a genuine business expense, the benefits are significant for both employer and employee.
A relevant life policy is a type of life assurance designed specifically for employers who want to provide death benefit cover to individual employees outside of a registered group life scheme. This insurance cover is written into trust from day one, meaning the death benefit is paid directly to the employee’s chosen beneficiaries free from inheritance tax. For company directors, employees, and employers alike, relevant life insurance offers a highly cost-effective way to secure valuable life cover. Relevant life insurance offers a range of benefits that make it an attractive option for both employers and employees.
Here are some of the main advantages of this type of life cover:
Tax Benefits for the Employer
• The company pays the premiums as an allowable business expense, which can reduce the corporation tax bill.
• There are no National Insurance contributions due on the premiums paid by the employer, unlike with a group life scheme where employer NICs may apply.
• Relevant life insurance is not classed as a benefit-in-kind for the employee, so there is no additional employer NIC liability.
Tax Benefits for the Employee
• The employee does not pay income tax on the premiums the employer pays on their behalf.
• The death benefit is paid tax-free to the employee’s beneficiaries because the policy is held in trust.
• There is no impact on the employee’s lifetime allowance for pensions, which can be a significant advantage for higher earners approaching retirement.
Benefits for Directors and Business Owners
• Directors who are employees of their own limited company can use a relevant life plan to provide life cover funded by the business.
• This is a more cost-effective way of providing protection compared to paying premiums from personal income after tax.
• The cover sits outside of pensions, so it does not count towards the annual or lifetime pension allowances.
At Buckingham Mortgage Group, we offer specialist support and advice on relevant life insurance and wider business protection.
We help company directors, employers, and employees find the right life cover. Here is what sets us apart:
• Free, no-obligation advice – our protection advice is completely free. We are here to support you without any pressure.
• We compare relevant life plans, life insurance policies, and cover options from to find the most competitive premiums and the best cover for each client.
• Expert advisers – we understands the complexities of relevant life insurance & business protection, so we can provide holistic support.
• Support for existing customers – we do not just help you set up a policy and walk away. We provide ongoing support, regular reviews, and are always available to help you and your employees with any protection or insurance queries.
Whether you are a single director looking to arrange your own life cover, or an employer wanting to provide insurance cover for multiple employees, we can help. Speak to an adviser today to find out how a relevant life plan could save your company money while providing valuable life insurance protection for the people who matter most.
As well as relevant life insurance, you might also want to consider:
Key person insurance – key person (or keyman) insurance helps to protect a key employee.
Shareholder protection – shareholder protection insurance allows remaining shareholders to purchase the shares of a shareholder that has recently died or become seriously ill.
We'll help you understand your options so you can make an informed decision about your protection.
No. Relevant life policies are not considered a benefit-in-kind. They are generally treated as an allowable business expense, so the employee does not pay income tax or National Insurance on the premiums.
This is one of the key benefits of this type of life insurance cover for both employer and employee. They’re generally considered to be an allowable business expense, so employees won’t need to pay income tax or National Insurance on the premiums.
No. Because the relevant life policy is held in trust, the death benefit lump sum is paid tax-free to the employee’s beneficiaries. The payout does not form part of the employee’s estate and is not subject to inheritance tax.
Relevant life insurance policies are available for employees between the ages of 16 and 73. The age range may vary slightly between insurers, so it is worth speaking to an adviser to understand the specific cover options available based on the age and health of the person to be covered.
The cost of relevant life insurance premiums depends on several factors, including the employee’s age, health, the level of cover required, and the policy term.
Because the premiums are paid by the company and qualify for corporation tax relief, the effective cost is significantly lower than arranging equivalent personal life insurance. Your adviser can provide a personalised quote based on your specific needs.
If an employee leaves, the relevant life policy typically ends. However, many insurers offer the option to convert the policy to a personal life insurance plan so the employee can continue their cover.
It is important to discuss this with your adviser and the insurer when the policy is first set up, so the employee understands their options if their employment changes.
No. Relevant life insurance is only available to employees of a limited company. Sole traders and partners in traditional partnerships are not eligible, as there is no employer–employee relationship.
However, if you are a sole trader, you may benefit from other types of life insurance or protection. Speak to our adviser team for support and guidance on the right cover for your circumstances.
What People Think About BMG
Please call us using the telephone numbers below. Alternatively please use the contact form and we will get back to you as soon as possible.
