Relevant Life Insurance

A tax-efficient alternative to traditional personal life cover.

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Did you know it's now possible for your company to set up life insurance for you, for the benefit of your family?

And that your company can pay the premiums too?

Even better, this is an allowable business expense. Higher rate tax payers could save up to 50%!

To take advantage of this opportunity, we can help you set up a Relevant Life Insurance policy.

How it works:

  • Instead of paying for your life cover with you personal taxed income, your business pays the premiums instead.
  • The policy is written in trust, for the benefit of your family and therefore does not form part of your estate for Inheritance tax purposes.
  • Is it a taxable benefit? Premiums paid by employers aren't normally assessable on the employee as a benefit in kind, so they're not subject to income tax. Also, premiums paid by employers aren't normally assessable for employer or employee National Insurance contributions.

Are there any potential drawbacks?

Cover must cease by age 75 at the latest, the maximum amount of cover depends on your age and earnings at the time of application and Critical illness cover cannot be included.

How much tax could you save?

Use this handy calculator to compare the cost of a Relevant Life Cover to the cost of an ordinary Life Cover:

The example below shows how a Relevant Life Policy can cut costs:

Ordinary life cover Relevant life policy
Premium £1,000 £1,000
Company gross costs:    
Employee's National Insurance contribution at 2% £34 Nil
Income tax @ 40% £690 Nil
Employer's National Insurance contribution at 13.8% £238 Nil
Total company gross cost £1,962 £1,000
Corporation tax relief at 20% £392 £200*
Net cost £1,570 £800*

*Assumes that corporation tax relief at 20% has been granted under the 'wholly and exclusively' rules. In both cases we've assumed a payment of £1,000 each year for the life cover on an employee who's paying income tax at 40% and employee's National Insurance at 2% on the top end of income. We've also assumed that the employer is paying corporation tax at the small profits rate of 20% and will pay employer's National Insurance at the contracted-in rate of 13.8%.

Did you know?

Only 25% of business owners
have ever set up a Relevant Life Plan

and 63% have never even heard of a Relevant Life Plan!

Statistics from a 2013 Legal & General survey

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Unsure if you need Relevant Life Cover?
Want to know more?

Call us 01625 462 744

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We don't charge you a fee

If you start a policy, we will be paid a commission by the insurance company. The insurance company will usually pay for any doctor's fees if reports are required.