11 Purdeys Way Purdeys Way, Rochford, England, SS4 1ND
11 Purdeys Way Purdeys Way, Rochford, England, SS4 1ND
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Relevant Life Insurance is an excellent option if you wish to safeguard your directors & staff while also gaining significant tax advantages for your company.
In today’s competitive landscape, providing relevant life cover is more than just a benefit, it’s a strategic financial decision that can save you money. A Relevant Life Plan is a specialised life insurance policy that can provide financial protection for your directors & employees. It provides a predetermined lump sum payout to an employee’s beneficiaries if they pass away while actively employed.
Let’s take a look at the key features of the best Relevant Life Insurance policies:
When you take out a Relevant Life Insurance policy for your employees, it guarantees that they will be covered for death and terminal illnesses. Aviva is the only provider that also includes critical illness in their Relevant Life Insurance policy.
Having Relevant Life Insurance for your company means that if the person covered dies or is diagnosed with a terminal illness while employed at your company, their beneficiaries will receive a lump sum of money. These funds can provide the employees with much-needed financial help to cover expenses such as funeral costs. If the employee is terminally ill, the Relevant Life policy may be paid out early to help cover care costs and other expenses.
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Some providers will also allow you to add additional cover. This includes Increasing Cover, where the sum assured can automatically increase along with RPI or a fixed percentage. The Life Change Benefit means that if the life-assured circumstances change, you can take out additional cover without the need for further medical underwriting.
Relevant Life Insurance is a highly tax-efficient way for employers to provide life cover for employees and directors. Unlike traditional life insurance, it offers significant cost savings due to HMRC’s favourable tax treatment.
Relevant Life cover isn’t treated as a benefit in kind, so the insured employee or director won’t need to pay Income Tax or National Insurance contributions. Learn more about Relevant Life Insurance Tax.
To be eligible for Relevant Life Insurance for directors and employees, they must meet the following criteria:
You can contact us today to get a quote and find the best Relevant Life Insurance for your company and employees.
Relevant Life Insurance can be used to cover employees and company directors of limited companies. This includes part and full-time workers, but excludes sole traders, partnerships and LLPs, as they aren’t employees of a limited company. You can get Director Relevant Life Policy or a Contractor Relevant Life Policy to specifically cover company directors or contractors of limited companies.
A Relevant Life Plan is set up on an individual and life-of-another basis. The company sets up the policy and pays for the premiums, while the beneficiaries of the insured person receives the lump sum should they pass away.
It’s advisable to set a maximum amount of cover based on the employee’s gross annual earnings and age. For example, 17-29 years old may have remuneration of up to 35x, while employees over 60 years old may have remuneration of up to 15x.
The amount of cover for a Relevant Life plan should be based on the lost income of the employee, including their salary, bonuses, benefits in kind and regular dividends.
While a Relevant Life Plan is a tax-efficient way for businesses to provide life cover for employees and directors, there are other insurance options depending on your specific needs.
Key Man Insurance is designed to benefit the company. It’s designed to pay out a lump sum to the company if a key employee or director dies or becomes critically ill. The money can be used to cover lost revenue, recruitment costs, loan repayments and other expenses. Shareholder Protection Insurance is also designed to cover the company. Should a shareholder pass away, the policy will provide funds for surviving shareholders to buy the deceased shareholder’s shares, which helps ensures business continuity and avoids shares passing to family members.
Your company may also want to consider Business Loan Protection. This is another form of life insurance, which protects the business should a key member of the team pass away and pays off outstanding corporate debts. Some policies also offer Critical Illness cover, which protects the company should a key member become critically ill and no longer able to work.
To get the best cover for your company and staff, get in touch with My Key Man Insurance. As an insurance broker, we compare various lenders and policies to provide you with tailored coverage to suit your business requirements.
If you need more guidance on how to choose Relevant Life Insurance vs Life Insurance, we can walk you through your options and the factors to consider of both.
Contact us today to find the best business insurance for your company, directors and employees.
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Jody was very helpful in explaining the options and I thoroughly recommend his company
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
I had a great time working with My Key Man Insurance when I applied for the different insurances they offer.They were able to answer all of my questions quickly and effectively. I will recommend them to my friends and family.
It is so amazing working with this insurance company. i have had many unpleasant experiences with some insurances company in the past but working with Mykey insurance has really change my opinion and believe about insurance company.
The standard of service was first class. They kept me up to date with progress on my Relevant Life Policy, followed up promptly following delays caused by my medical practice being slow in compiling reports, and responded instantly and clearly to any questions I had.
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
Jody was very helpful in explaining the options and I thoroughly recommend his company
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Death in Service is a benefit that is provided by the employer for employees. If an employee dies while they are employed at your company, the insurance pays out a lump sum to the employee’s listed beneficiaries. Once the employee leaves the company, the coverage ends. Relevant Life insurance is also a benefit provided by the employer but is typically only used to insure directors or senior staff, rather than all employees. Unlike Death in Service, a Relevant Life policy can be transferred if the employee changes job.
The employer is the owner of the Relevant Life policy, while the employee is the insured person. The insurance money is paid directly to the employee’s beneficiaries should the employee die or become ill.
Relevant Life isn’t reserved for directors; the insurance can cover any employee of a company. However, Relevant Life insurance is predominantly used to cover directors of small businesses or limited companies as the premiums are paid by the company and are typically considered a business expense. This makes them eligible for tax relief.
The maximum amount of cover depends on the employee’s age and salary, as shown below:
Normally, a provider will accept a policy under £500,000 without needing financial evidence.
Most standard Relevant Life insurance policies will only cover an employee if they die. However, some providers also offer critical illness cover. The beneficiaries will receive a lump sum to help care for the insured person if they develop a terminal illness and are no longer able to work.
It’s a legal requirement for Relevant Life insurance policies to be held in trust. This ensures the insurance money goes to the right people (the named beneficiaries). Having the policies in trust also has tax advantages for both the employee and employer. The benefits don’t form part of the insured employee’s estate, which means they’re not liable for Inheritance Tax. Relevant Life insurance is also considered a business expense and the premiums paid receive tax relief.
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