RELEVANT LIFE COVER

A tax-efficient life insurance policy designed for directors and employees.

For small businesses wanting to top up death-in-service benefits without triggering "benefit in kind".

We understand relevant life cover

Relevant Life Cover is a tax-efficient life insurance policy designed specifically for directors and employees.

It allows a business to provide individual death in service cover without the need for a registered group life scheme. Often used by small businesses, contractors and director-led companies, Relevant Life Insurance enables the company to pay for personal life cover on behalf of an employee or director in a highly tax-efficient way.

The policy is taken out and paid for by the business and written into a discretionary trust. If the insured person dies during the policy term, a lump sum is paid to their chosen beneficiaries - not the company.

frequently asked questions

Who can have Relevant Life Cover?
Relevant Life Cover is typically available for:

Company directors
Employees of limited companies
Contractors working through a limited company
Small business owners

It cannot normally be taken out by sole traders or partnerships, because the policy must be paid for by a company.
Why do company directors choose Relevant Life Cover?
Directors often choose Relevant Life Cover because it can be much more tax-efficient than paying for personal life insurance privately.

Key benefits include:

Premiums are usually paid by the company
Premiums may be treated as a tax-deductible business expense
No benefit-in-kind tax for the employee
The payout is normally free from income tax and inheritance tax when written in trust
Is Relevant Life Cover tax-efficient
Yes, Relevant Life Cover is widely considered one of the most tax-efficient ways for company directors to arrange life insurance.

Potential tax advantages include:

Corporation tax relief on premiums (subject to HMRC rules)
No benefit-in-kind tax for the employee
Payout normally outside the employee’s estate for inheritance tax purposes
The policy does not count towards pension lifetime allowances

Tax treatment depends on individual circumstances and legislation, so professional advice is recommended.
How much cover can I get with Relevant Life Insurance?
The maximum cover available usually depends on factors such as:

The employee’s age
Their salary or total remuneration
The insurer’s underwriting limits

Typically, cover can be up to around 20–30 times annual remuneration, depending on age and insurer.
Who receives the payout from a Relevant Life policy?
Relevant Life policies are normally written in trust, meaning the payout goes directly to the chosen beneficiaries, such as:

A spouse or partner
Children
Other family members

Because the policy is in trust, the payment does not usually form part of the employee’s estate, helping avoid inheritance tax.
Can contractors use Relevant Life Cover?
Yes. Many contractors operating through a limited company use Relevant Life Cover because it allows their company to pay for life insurance in a tax-efficient way.

This can often be more cost-effective than paying for life cover personally.