What is Relevant Life insurance?

Relevant Life cover is a life assurance plan taken out by a company on a member of staff (such as a director, owner or other valuable employee).

The benefit is directed by the employee but paid for by the company. Both parties benefit from generous tax allowances on the premium and the claim.

The plan also benefits high-earning employees who have exceeded their pension life time allowance, or directors who want to top-up their scheme benefits.

BBi Financial Planning can advise you on the options available from the whole market.

Relevant Life Insurance

Relevant Life insurance is a tax-efficient life insurance policy allowing employers to offer death-in-service cover to select employees.

Companies can benefit from tax-savings for the premiums while employees benefit from tax-free proceeds on a claim.

The right financial advice can give you the resources to protect your business and ensure its future success should the worst happen.

Why use
BBi Financial Planning?

Chartered

Our advisers have obtained the highest level of qualification in UK financial services

Experienced

With decades of experience between them our advisers have seen it all.

Technology

We use the best tools available to make sure our research is as good as it gets.

Compliant

We invest heavily in expert compliance support to ensure our staff and processes are always under scruitiny.

Connected

We have relationships with tax and legal experts to provide you with a holistic support network.

Available

A service agreement with us means you will be able to speak to your chartered adviser. You won’t be stranded with someone else.

Benefits of Relevant Life Insurance

As a fixed-term life assurance plan, Relevant Life benefits from guaranteed premiums which are treated as a tax-deductible expense for business purposes.

The cover is not treated as a benefit in kind.

Group cover is also available from some providers.

Why choose
BBi Financial Planning
for Relevant Life insurance?

Independent Advisers

We are proud of our independence.
It means no-one tells us what to do but you.
You can trust us to put your needs and goals first.

Chartered Professionals

We are a chartered firm and our advisers hold chartered status.
This puts us in the small elite number of firms in the UK, and means we uphold the highest standards.

Bespoke Cover

Our advisers will take the time to understand exactly what you need protected and why, and advise you on the most suitable options for your budget.

Is Relevant Life cover right for you?

Save tax for your business

Premiums for Relevant Life assurance are considered an allowable expense for the purposes of corporation tax which means you can reduce your tax bill.

Save tax for you

Relevant life assurance premiums are paid for by your company but they do not have to be declared as a benefit in kind.

Save tax for your family

Business owners and company directors often acquire more valuable estates. A Relevant Life assurance plan can pay a claim free from inheritance tax.

What are the benefits of Relevant Life insurance?

Relevant life insurance provides cost effective cover for business owners and key employees

Save tax

The right insurance can save you money

Save up to 49% compared to an identical life assurance plan

Tailored cover for your needs

Only pay for the cover you need

Subject to limits of the total cover, you can have as many term assurance plans as you need. For example your mortgage, car loan and other debts can all be covered with their own plan, providing maximum flexibility for you.

Predict your cashflow

Fix your budget

Relevant LIfe Insurance is a fixed term assurance plan which means you know exactly how much it will cost.

Frequently Asked Questions about Relevant Life Insurance

Relevant Life is a fixed-term life insurance policy designed for business owners and company directors which benefit from big tax savings - up to 49% for a higher-rate tax-payer

Relevant Life insurance is intended for business owners and directors who are paid a salary via PAYE (pay-as-you-earn).

It is not available for self-employed individuals.

The premiums for relevant life insurance are paid for by the business, but do not count as a benefit-in-kind.

 

This is one of the major tax benefits of relevant life insurance.

While some insurance companies claim that critical illness cover can be included in a relevant life policy, to the best of our knowledge HMRC has not signed off on this.

Most insurance companies disagree with this view.

The tax implications of getting this wrong are huge, so we will not recommend relevant life insurance with critical illness.

You can read more about critical illness cover here.

No. Relevant life insurance policies only cover one person.

Relevant Life is a very tax efficient form of life insurance.

  1. The premiums do not count as a benefit in kind (P11D benefit) for the individual.
  2. The premiums count as a legitimate expense for the purposes of corporation tax.
  3. With the correct trust in place the benefits of a claim can be paid free of inheritance tax.

Some insurance companies can provide a relevant life policy on a decreasing basis.

Some insurance companies can provide a renewable relevant life policy.

Some insurance companies can provide a renewable relevant life policy.

Yes, some relevant life policies can include an indexation benefit, where the cover increases in line with inflation each year.

 

The cost is recalculated each year based on the new sum assured.

Most life insurance does not have a theoretical upper limit, but because of the tax benefits of relevant life insurance HMRC has set upper limits on the cover.

 

  1. If you are aged 16-39 the maximum cover is 30x your total remuneration.
  2. If you are aged 40-49 the maximum cover is 20x your total remuneration.
  3. If you are aged 50+ the maximum cover is 15x your total remuneration.

 

HMRC defines total remuneration to include:

 

  1. Basic salary
  2. Bonuses
  3. Dividends
  4. Other benefits-in-kind

 

Additional underwriting requirements will apply as cover increases, and these could be financial as well as medical.

In the event of a claim,  the benefits are typically paid as a single lump sum to a designated beneficiary.

 

Payments are usually made by bank transfer.

No. Relevant Life insurance is intended to provide personal benefits to key individuals at the expense of the company. 

 

Shareholder protection plans are more complicated to arrange as more people are involved.

 

Read more about shareholder protection here.

No. Relevant Life insurance is not available for sole traders and other self-employed individuals as the policy must be owned by a limited company.

Yes. Using a trust as part of your relevant life insurance is essential to ensure you do not pay tax on any claim. You won't be able to start your policy without the trust in place.

The standard trust wording for relevant life insurance is based on a discretionary trust.

 

This places the claim benefits outside of your estate for the purposes of inheritance tax, meaning your loved-ones can benefit from the full value of your plan.

As long as the correct trust is in place, there will not be any tax to pay in the event of a claim for relevant life insurance.

The cost of relevant life insurance depends on three key factors.

 

  1. How much cover do you need?
  2. How long do you need the cover for.
  3. How old are you?

 

Your health and lifestyle are also underwriting factors as they can affect how likely you are to make a claim.

 

If you want an idea of the costs involved please get in touch and we would be happy to answer your questions.

 

Note: Premiums can only be guaranteed after a full application has been completed and underwritten.