Relevant Life Cover for Company Directors and Employees
What Is Relevant Life Cover?
Relevant life cover is a type of life insurance that a limited company can arrange and pay for on behalf of a director or employee. It provides a lump sum to the individual's family or beneficiaries if they die during the term of the policy, giving directors and employees personal life cover without it being arranged through their own post-tax income.
It's a popular option for company directors who want life insurance but would otherwise need to pay for it personally out of income that has already been taxed.
Why It Can Be Tax-Efficient
Premiums for relevant life cover are usually treated as an allowable business expense, subject to eligibility and current tax rules, rather than being paid from a director's post-tax income. The business pays the premium directly, and in most cases the benefit is paid free of income tax and inheritance tax when the policy is written into an appropriate trust.
This is why many company directors consider relevant life cover instead of arranging personal life insurance, which would need to be funded from income that has already been taxed.
How the Policy Is Structured
The business owns and pays for the policy, and it's usually written into a relevant life trust from the outset. This helps ensure the payout reaches the intended beneficiaries quickly and is kept outside of the individual's estate for inheritance tax purposes.
Cover is subject to underwriting, provider terms and HMRC rules, so it's important to get advice to make sure it's set up correctly for your circumstances.
Who Is It Suitable For?
Relevant life cover may be suitable for limited company directors and employees who want personal life insurance in a tax-efficient way, particularly where the business doesn't offer a group life scheme, or where the individual is the sole director of their own company.
Because eligibility, tax treatment and trust arrangements can be complex, advice is important to make sure the policy is set up correctly and remains suitable for your circumstances.
Relevant Life Cover FAQs
Ready to Explore Relevant Life Cover?
New to business protection, or reviewing arrangements you already have? We'll talk you through the options and recommend what genuinely suits your company.
Review My Relevant Life Cover
Tell us about your company and we'll be in touch to discuss your options.