Director Life Insurance
Tax-efficient life cover specifically structured for company directors.
Company directors have unique options when it comes to life insurance. A Relevant Life Plan — arranged through the company — is typically the most tax-efficient way for a director to obtain life cover, with premiums paid by the company as a business expense.
What is Director Life Insurance?
Director Life Insurance refers to life insurance arranged specifically for company directors, taking advantage of the tax efficiencies available to limited company owners. The most common structure is a Relevant Life Plan, where the company takes out and pays for the policy on the director's life. This is significantly more cost-effective than a personal policy for most directors.
Who is it suitable for?
Key Benefits
Tax Considerations
For most company directors, a Relevant Life Plan is the most tax-efficient way to obtain life cover. The company pays the premiums as a business expense, saving corporation tax. The director pays no income tax or National Insurance on the premiums. The payout is written in trust and falls outside the director's estate, so it is not subject to inheritance tax. Compared to paying for life insurance personally from post-tax income, the saving can be substantial — particularly for higher-rate taxpayers.
Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Example Scenarios
Director saving on life insurance
A director paying 40% income tax and 2% NI wants £500,000 of life cover. By arranging this through a Relevant Life Plan, the company pays the premiums as a business expense. The director effectively receives the same cover at a fraction of the net cost compared to a personal policy.
Director with pension concerns
A director who has exceeded their pension lifetime allowance uses a Relevant Life Plan to provide death benefits outside the pension framework, avoiding the associated tax charges on pension death benefits.
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Why Choose JK Insurance Brokers?
- Whole-of-market access
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- No broker fees
- Business protection specialists
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