Relevant Life Insurance 

What is a Relevant Life Plan?

A Relevant Life Plan is a company-funded life insurance policy. It ensures financial protection for an employee’s beneficiaries by providing a tax-efficient lump sum payout if the employee dies or becomes terminally ill while working for the business.

Who Can Benefit from a Relevant Life Plan?

Small businesses and limited company directors benefit from this option when they want affordable cover without committing to a group scheme. It is also valuable for high-earning employees who want additional life insurance without affecting their lifetime pension allowance. Families of employees are another group that benefits, as they receive tax-free payments in the event of death or terminal illness.

Are Premiums Tax-Deductible?

For employers, premiums are generally treated as a business expense and are usually tax-deductible. This makes a Relevant Life Plan a cost-effective way to offer employee benefits.

Is the Payout Tax-Free?

When the policy is set up under a discretionary trust, payouts are normally exempt from income tax, National Insurance, and inheritance tax, making the benefit even more efficient.

Can Critical Illness Cover Be Added?

Depending on the provider, some policies allow critical illness cover to be included. Businesses should review available options with the insurer before finalising a plan.

What Happens If an Employee Leaves?

If the employee leaves the company, many providers offer the option to convert the plan into a personal life insurance policy. This allows the individual to continue cover independently of their employment.