Relevant Life Insurance
Tax-efficient director life insurance — paid by your company, not from your personal income.
A Relevant Life Plan is one of the most tax-efficient ways for a limited company to provide life insurance for a director or employee. Your company pays the premiums as a business expense, and the cover can offer significant tax advantages compared to a personal life insurance policy — subject to HMRC rules and individual circumstances. If you are a company director currently paying for personal life insurance from post-tax income, a Relevant Life Policy is almost certainly worth reviewing.
What is Relevant Life Insurance?
A Relevant Life Plan is a single-life, term assurance policy taken out by a limited company on the life of a director or employee. The policy is written in a discretionary trust, so the payout goes directly to the beneficiaries — outside the estate and without going through probate. It provides the same cover as a personal life insurance policy (a lump sum on death within the policy term), but the structure and payment method are fundamentally different. Because the company pays the premiums, the tax treatment can be significantly more favourable than a personal policy for most directors. Relevant Life Insurance is sometimes called Director Life Insurance or Tax Efficient Life Insurance.
Who is it suitable for?
Key Benefits
Tax Considerations
Relevant Life Plans can offer significant tax advantages for company directors, subject to individual circumstances and HMRC rules. Premiums paid by the company may qualify for corporation tax relief. The individual pays no income tax or National Insurance on the premiums as a benefit-in-kind. The payout is made via a discretionary trust and falls outside the estate for inheritance tax purposes. The combination of these potential advantages means the effective cost of cover can be substantially lower than an equivalent personal policy for most directors. Tax treatment depends on individual circumstances and may be subject to change.
Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Real-World Examples
Director, age 45 — £750,000 cover
A company director currently pays £120/month for personal life insurance from post-tax income. By switching to a Relevant Life Plan, the company pays the premiums instead. The director pays no income tax or NI on the benefit, and the company may qualify for corporation tax relief on the premiums — subject to HMRC rules. The payout falls outside the estate via a discretionary trust.
IT contractor through a PSC
An IT contractor operating through their own limited company takes out a Relevant Life Policy through the company. The premiums are paid as a business expense. The contractor pays no income tax or NI on the benefit, and the cover can be based on total remuneration including dividends — typically up to 25× total remuneration.
Two directors — different cover amounts
A business with two directors arranges separate Relevant Life Plans for each, with cover amounts based on their individual remuneration. Each policy is written in trust for the benefit of their respective families. The company pays both sets of premiums as a business expense.
Frequently Asked Questions
Request Your Relevant Life Quote
Find out if your business protection is adequate, correctly structured, and as tax-efficient as it could be.
Why Choose JK Insurance Brokers?
- Whole-of-market access — all leading insurers
- FCA authorised & regulated (FRN 1047042)
- No broker fees — ever
- Business protection specialists
- Personal, one-to-one service with Tom Dobbe
- UK-wide advice by phone or video call
- Ongoing reviews as your business grows
Speak Directly to Tom
I help company directors and business owners protect their families, shareholders and businesses.
01737 333249[email protected]