What relevant life cover is
Relevant life cover is a life insurance policy taken out by a company on an employee or director's life, paying out to their family. Premiums are usually an allowable business expense and not normally treated as a benefit in kind, making it highly tax-efficient compared to personal life cover. The best policy suits directors and small businesses without a group scheme.
1. Relevant life cover for company directors
Lets directors get personal life cover paid by the company, tax-efficiently. Best for directors of limited companies who'd otherwise pay for life cover from taxed personal income — often the most cost-effective route.
2. Relevant life cover for small businesses
Provides death-in-service style benefits for employees without needing a full group scheme. Best for small companies (too small for group life) wanting to offer a valuable benefit.
3. Relevant life vs personal life insurance
Because it's paid by the company and tax-advantaged, relevant life can cost less overall than equivalent personal cover for a director. Best to compare both — for directors, relevant life often wins on cost.
4. Relevant life with trust
Relevant life policies are written in trust, so the payout goes to the family efficiently and usually outside the estate for inheritance tax. Best practice — and standard — for these policies.
Who it suits
- Limited company directors wanting tax-efficient personal cover
- Small businesses without a group life scheme
- High earners who'd benefit from company-paid premiums
- Those wanting cover written in trust for the family
How to find the best relevant life cover
Relevant life cover is specialist and must be set up correctly to keep its tax advantages. A protection specialist will arrange it properly and competitively. Find a protection specialist through Nesto — free, no obligation.
Frequently asked questions
What is relevant life cover?
A life insurance policy a company takes out on a director or employee, paying out to their family, with premiums usually an allowable business expense.
Who is it for?
Company directors wanting tax-efficient personal cover, and small businesses without a group life scheme.
Is it cheaper than personal life insurance?
For directors, often yes — because the company pays and it's tax-advantaged, the overall cost can be lower than equivalent personal cover.
Is it a benefit in kind?
Normally no — relevant life premiums aren't usually treated as a P11D benefit in kind, which is part of the tax efficiency.
Does it pay out to my family?
Yes — it's written in trust so the payout goes to your family efficiently, usually outside your estate for inheritance tax.