We use cookies to give you the best experience and help us improve our website.

Find out more about how we use cookies.

Relevant life insurance is set up by an employer and provides a payment to an employees’ beneficiaries if they were diagnosed with a terminal illness or dies.

Similar to death in service insurance, relevant life insurance can be more suitable for SMEs (small and medium sized enterprises) that wouldn’t have enough employees to warrant a group scheme.

  • Tax-free lump sum to employees beneficiaries
  • Corporation tax deductible for employers
  • Gives peace of mind to employees and their families

The Alan Boswell Group Difference

ABG Difference

Alan Boswell Financial Planners are one the UK’s leading, truly independent, financial advisers providing a range of flexible employee benefit solutions for businesses.

We can help with all your employee benefits including: Workplace Pension/Auto-Enrolment Schemes, Group Income Protection Schemes, Death in Service Schemes, Critical Illness Schemes and Flexible Benefits

Relevant Life Insurance in detail

Relevant life insurance is an employee benefit suited to SMEs. It is a life insurance policy taken out by an employer for specific employees and would pay the beneficiary of the employee a tax-free lump sum if they were diagnosed with a critical illness or died.

Relevant life insurance is tax efficient for both the employee and employer. The employee would not be required to pay income tax or National Insurance on the premiums, with any pay out also being tax free. The policy is considered tax deductible for the employer for the purpose of corporation tax.

The lump sum payment is normally based on the employee’s earnings and the employer can set the multiplier from which the final sum would be calculated.

FAQ's

  • Relevant life policies are arranged by an employer for the benefit of an employee. They are often based on a multiple of an employee’s salary and the multiple is normally based on the employee’s age. In the event of a successful claim, the policy would pay out a tax-free lump sum to the employee’s beneficiaries (usually their partner or dependants).

  • A relevant life policy will cover one employee. However, an employer can take out individual policies for multiple employees.

  • Relevant life policies are not considered a benefit-in-kind. They’re generally considered to be an allowable business expense, so employees won’t need to pay income tax or National Insurance on the premiums.

  • No, by definition a sole director or trader is not considered an employee and does not have an employer that can take out the policy for them. A sole trader can take out a relevant life policy for any of their employees.

  • No, relevant life policies provide different benefits to shareholder protection.

    Shareholder protection is designed to benefit the other shareholders in the business so that they can purchase the deceased’s shares in the event of the death or critical illness of a shareholder.

    Relevant life insurance pays out to the employees’ beneficiaries (usually their partner or dependants) so that they are financially provided for. Relevant life insurance can be taken out for any employee in the business.

    Employers may choose to take out both shareholder protection and relevant life insurance.

  • No, lump sum pay-outs are not taxed.

  • Policies are available for employees between the ages of 16 and 73.

  • The employer is the owner of the policy as they pay the premiums.

Get in touch

Speak directly to our team
01603 967967
Request a callback Request a callback
Request a callback
Callback Enquiry
Callback Enquiry
  • Contact Details

  • If applicable
  • This field is for validation purposes and should be left unchanged.
Send an enquiry Send an enquiry
Send an enquiry
Make an enquiry - Financial Advice
Make an enquiry - Financial Advice
  • Contact Details

  • If applicable
  • Enquiry Details

  • Please provide any further information you think may be relevant.
  • This field is for validation purposes and should be left unchanged.