Relevant life insurance is a tax-efficient life insurance policy that UK businesses can offer to their employees. This type of insurance provides a lump sum benefit to an employee’s family or nominated beneficiaries if the employee dies or is diagnosed with a terminal illness while employed by the company.

Premiums are usually tax-deductible for the employer as a business expense, making it a cost-effective benefit for the company.

The benefits paid out are typically free from income tax, national insurance, and inheritance tax, providing significant financial support to the employee’s beneficiaries.

Relevant life insurance is especially beneficial for small businesses and directors of limited companies who want to provide life cover without establishing a group life scheme.

It’s an excellent option for high-earning employees and directors, as it doesn’t count towards the employee’s lifetime pension allowance.

Coverage continues as long as the employee remains with the company, and some policies offer the option to convert to a personal plan if they leave.

By understanding the benefits and workings of relevant life insurance, UK businesses can make informed decisions about providing valuable life cover to their employees, enhancing their overall benefits package while enjoying tax advantages.