Relevant Life

Relevant life cover is a tax efficient way for employers to provide individual death-in-service benefits to employees.

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Relevant life cover is a tax efficient way for employers to provide individual death-in-service benefits to employees. It pays out a lump sum if the employee dies or is diagnosed with a terminal illness during the term of the policy. It’s paid for by the business and placed into trust. This means the lump sum is paid out quickly to the employees beneficiaries and is free from inheritance tax.

Who is it for?

  • SMEs that don’t have enough staff to warrant a group scheme.
  • Members of a group scheme that would like to top up their benefits.
  • Directors who would prefer not to create a group scheme, but would like to provide their own individual ‘death in service’ benefits.
  • Anyone classed as a high earning individual i.e. directors, where ‘death in service’ is not currently included in their lifetime allowance.

Related FAQs

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Who should consider a relevant life policy?

Directors could take out the cover to provide a ‘death in service’ benefit, without having to take out a scheme to cover all employees. It helps to retain employees and ensure should the worst happen, their loved ones are financially cared for.

What is a relevant life policy?

It is a term assurance available for employers to provide employees with a ‘death in service’ benefit. It provides a lump sum payment on death and there can be many tax advantages to both the employer and employee for this type of policy.

What are the benefits of a relevant life policy?

No National Insurance contributions on premiums and corporate tax relief for the business itself. For their employee there will be no National Insurance contributions on premiums or benefits. The benefits are not taxed as a benefit in kind and importantly the benefits do not count towards annual or lifetime allowances tax benefits.

Who can take out a relevant life policy?

UK resident businesses. These businesses can be a limited companies, a limited liability partnership or sole trader.

Company directors can take out cover with the limited company paying for this.

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