Search 
Client Portals 
020 7444 4030 
It can be especially attractive for companies with high-earning directors or employees who want a robust death-in-service benefit without impacting pension allowances.
Business protection
Relevant life cover
For many small or mid-sized businesses – where a full group life scheme isn’t practical – relevant life cover offers a simple, tax-efficient alternative.
Why relevant life cover works for your business
- A relevant life plan pays out a tax-free lump sum if the covered person dies while employed. Premiums are typically a tax-deductible business expense, so the cost to the company can be significantly lower than having each employee arrange their own policy
- It’s ideal for businesses with too few staff members to justify a group scheme – helping you protect key people or directors without the overhead of a larger policy
- Because premiums don’t count as personal benefits, there are no employer or employee National Insurance charges on them, and the benefit isn’t treated as a taxable benefit in kind (P11D)
Benefits for directors and employees
- Unlike many group death-in-service schemes, the payout from a relevant life plan does not count towards pension lifetime allowances. That makes it particularly useful for high earners
- The policy is often portable: if the employee leaves or the company structure changes, the cover can often transition to a personal policy
- As the cover is typically written into a trust, the lump sum payout generally falls outside the employee’s estate, which often avoids complications with inheritance tax
When is relevant life cover especially useful?
Relevant life cover tends to be most effective when:
- Your business is small, making a full group scheme impractical
- You have one or a few key employees or directors, rather than a large workforce
- Employees or directors earn well above average, so a tax-efficient lump sum benefit is attractive and broader pension-scheme limits are undesirable
- You want to offer death-in-service benefits without committing to a pension-style scheme
Typical cost efficiencies
This table compares the difference between a relevant life contract and the same level of monthly premium if this were paid by the employee. This assumes income taken as salary only, an income tax rate of 40%, employee’s NI rate of 2%, employer’s NI rate of 13.8% and corporation tax rate of 20%.
*Assumes that corporation tax relief is 19% and has been granted under the ‘wholly and exclusively’ rules. In both cases we’ve assumed a payment of £1,000 each year for the life cover on an employee who’s paying income tax at 40% and employee’s National Insurance at 3.25% on the top end income. We’ve also assumed that the employer is paying corporation tax at the small profits rate of 19% and will pay the employer’s National Insurance at 15.05%
How PWM can support you
Every business is different – we understand that there’s no “one-size-fits-all” approach.
Our advisers can help you determine whether relevant life cover is appropriate for your structure, consider the most suitable level of cover, ensure the policy is established correctly – including trust arrangements and tax efficiency – and integrate it seamlessly into your wider business protection and personal financial planning.
Ready to discuss relevant life cover?
Speak with our specialists to understand how relevant life cover could work for your business. We’ll review your situation and outline your options – with no obligation.
Related insights & guides
GUIDES
PWM Introduction to domiciles
Download
GUIDES
Insignis – Client brochure
Download
GUIDES
Your financial freedom
Download
GUIDES
The PWM Green Matrix
Download
GUIDES
An introduction to shareholder protection
Download
GUIDES
An introduction to US and UK investment and financial planning
Download
GUIDES
An introduction to tax and pensions
Download
GUIDES
An introduction to statutory residence test
Download
GUIDES
An introduction to remittance basis
Download
GUIDES
An introduction to protection
Download
GUIDES
An introduction to pre-arrival planning
Download
1
8
ABOUT US
Together, we make financial freedom simple.
As truly independent advisers, we don’t have in-house products we have to sell. And we don’t limit our advisers to specific financial solutions. Instead, we give them the freedom, knowledge and resources to recommend what’s best for each client so they can ensure the best possible outcomes.
