Relevant Life Insurance

A relevant life policy can be used as an alternative to a group life scheme or as a means to supplement it. It’s also a tax-efficient way to provide additional cover to high-earning employees and can be useful for a one-person limited company that’s too small to qualify for a group life insurance scheme. It’s worth keeping in mind however, that relevant life insurance isn’t available to sole traders who are registered as self-employed with HMRC but haven’t formed a limited company.

Insurance premiums will depend on the amount of cover, how long the cover needs to last, whether you want increasing or level cover, and whether you require reviewable or guaranteed premiums. Personal factors such as age, health, the type of work being carried out, and hobbies of your employees will be considered, too.

Some providers won’t offer insurance or may apply exclusions for various factors, so working with one of our advisors is a good way to navigate the market as a starting point. Typically, factors such as employment status, terminal illness, failure to disclose important information and the cause of death can cause exclusions on a plan.

This type of plan is usually viewed as an allowable business expense by HMRC, and all premiums and paid benefits qualify for income tax relief, national insurance relief and corporation tax relief. This means premiums could be reduced by up to 49% compared to a typical life policy if the employee is a higher rate taxpayer. For a basic rate taxpayer, this figure could be up to 40%.