Relevant Life Assurance

Relevant Life is a life insurance policy available to employers to provide an individual death-in-service benefit for an employee. It can help smaller businesses attract and retain high-calibre staff by offering them attractive benefits packages that are also tax efficient. It can also be a tax-efficient way for shareholder directors to take out life insurance.

It must meet legislative requirements so that the plan can qualify for certain tax benefits. Relevant Life Plans are usually viewed as an allowable business expense by HMRC. This means that all premiums and paid benefits qualify for full Income Tax relief, National Insurance relief and Corporation Tax relief. Premiums could be reduced by 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%. 

Tax Benefits at a Glance

Employer benefits:

• corporation tax relief (so long as the premiums are wholly and exclusively for the purposes of the business); and
• no National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy.

Employee benefits:

• no National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy;
• the policy payments won’t be taxed as a benefit in kind; and
• policy payments and benefits don’t count towards annual or lifetime pension allowances.

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Why not a Group Life policy for employees?

Group life insurance (also known as Death in Service) is one of the simplest, though most highly-valued employee benefits that a company can offer its staff. Group policies have advantages over individual relevant life assurances. But due to the flexibility of the schemes, you usually have to have five or more employees to cover. However, we do have schemes that start from just two employees.

Group Life policies are certainly more flexible. You can include different ranges of employees with different levels of cover. The plans can be on a declaration basis and therefore each year the cover will change to match the salary amendments.

However, a stand alone relevant life policy can also have its uses. For one you may only have one or two employees. Or you may wish to arrange a particular cover for an individual. 

​Please contact us for further information.