Relevant Life Insurance
Tax-efficient life cover for directors and employees, paid by the company.
A Relevant Life Plan is one of the most tax-efficient ways for a company to provide life insurance for a director or employee. Premiums are paid by the company and are typically treated as a business expense — making it significantly more cost-effective than a personal policy.
What is Relevant Life Insurance?
A Relevant Life Plan is a single-life, term assurance policy taken out by an employer on the life of an employee or director. The policy is written in a discretionary trust, so the payout goes directly to the beneficiaries and falls outside the employee's estate for inheritance tax purposes. Premiums are typically treated as a business expense and are not subject to National Insurance contributions.
Who is it suitable for?
Key Benefits
Tax Considerations
Premiums paid by the company are typically treated as a business expense for corporation tax purposes. The premiums are not treated as a benefit in kind for the employee, so there is no income tax or National Insurance liability. The payout is written in trust and falls outside the employee's estate, so it is not subject to inheritance tax. This combination of tax benefits makes a Relevant Life Plan significantly more cost-effective than a personal life insurance policy for most company directors.
Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Example Scenarios
Company director
A company director earning £100,000 per year wants £1,000,000 of life cover. By arranging this through a Relevant Life Plan, the company pays the premiums as a business expense, saving corporation tax. The director pays no income tax or NI on the premiums, and the payout falls outside their estate.
Small business owner
A small business owner cannot afford a group life scheme but wants to provide death-in-service benefits for key employees. A Relevant Life Plan for each key employee provides meaningful cover at a tax-efficient cost.
High earner with pension concerns
A director who has exceeded their pension lifetime allowance uses a Relevant Life Plan to provide additional death benefits outside the pension framework, avoiding the associated tax charges.
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