What is relevant life policy?
If you are a company director, a relevant life policy can be a tax efficient way to take out life insurance. The same way as a personal life policy, this type of cover is designed to pay a lump sum benefit to your loved ones upon a successful claim.
At the same time, a relevant life policy is a cost-effective way to set up individual death-in-service benefits for staff in companies that are too small to consider setting up a full group protection schemes.
Why are relevant life plans cost effective?
The cost of a relevant life policy can work out much less than the cost of arranging an equivalent personal life policy. This is because this type of plan is usually viewed as an allowable business expense by HMRC, all premiums and paid benefits qualify for full Income Tax relief, National Insurance relief and Corporation Tax relief.
The savings in premiums equates to up to 49% compared to a typical life policy if the employee is a higher rate taxpayer. For a basic rate taxpayer this figure could be up to 40%.
Who does relevant life insurance cover?
A relevant life policy covers the following types of individuals:
- Directors wishing to provide their own individual death-in-service’ benefits without taking out a scheme on all employees.
- Employers looking to provide death-in-service benefits
