The cost of a Directors Life Insurance policy varies according to several factors, including:
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Director’s life insurance is company-paid life cover arranged and paid for by your limited company rather than out of your personal income. The premiums are normally corporation tax deductible, it is usually structured as a Relevant Life policy, and the cover is written into a discretionary trust so the payout reaches your family quickly without forming part of your estate. For most directors, it works out 30-49% cheaper (depending on your tax bracket) than funding the same cover personally.
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Life insurance for company directors – often referred to as relevant life insurance – is similar to death-in-service policy. It’s arranged by the company on behalf of a director or employee. It is structured to meet the statutory Relevant Life conditions. The company pays the premiums and, where the usual business-expense rules are met, they can normally qualify for Corporation Tax relief. The cover is written into a discretionary trust from day one, so the payout goes to your chosen beneficiaries directly, outside your estate.
Three things make this different from a standard personal life policy. First, premiums paid by the company can normally qualify for Corporation Tax relief where the usual business-expense rules are met. Second, a qualifying Relevant Life policy is normally not treated as a P11D benefit in kind. Third, the policy is usually written into a discretionary trust so the proceeds can be paid to the director’s beneficiaries outside the company and, normally, outside the director’s estate.
Use our Relevant Life Insurance Calculator to see how much your company could save with this type of cover.
Most directors pay for personal life cover out of net salary or dividends, after personal tax has already been paid. Company-paid Director Life Insurance reverses that logic: the company pays the premium directly, while the cover protects the director’s family.
Here is a simple 2026/27 example. A higher-rate taxpayer paying 40% Income Tax and 2% employee National Insurance needs approximately £172.41 of gross employment income to have £100 left to pay a personal life premium. If the company instead pays a £100 Relevant Life premium and it qualifies for Corporation Tax relief, the effective cost is about £75 at the 25% main Corporation Tax rate or £81 at the 19% small profits rate.
This is why company-paid life cover can be materially more efficient than funding the same premium from taxed personal income. The exact saving depends on how the director is paid and the company’s Corporation Tax position.
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Policies for company directors’ life insurance work in a similar way to traditional life insurance but with one key difference — they’re structured for tax efficiency and business ownership.
| Feature | Director Life Insurance | Personal Life Insurance |
|---|---|---|
| Who Pays? | Paid by the company | Paid personally |
| Tax Treatment | Usually corporation-tax-deductible | Paid from after-tax income |
| Benefit-in-Kind | None – P11D-exempt | Not applicable |
| Payout | Tax-free to beneficiaries | Usually tax-free, but may count towards inheritance tax |
| Policy Ownership | Owned by the company, held in a trust | Owned by the individual |
| Eligibility | Employees and directors of a limited company | Anyone applying personally |
This setup allows businesses to offer valuable personal protection to directors or key employees, without the tax burden that comes from traditional life insurance.
The company takes out a policy on the director’s life, pays the premiums, and the policy is immediately written into a discretionary trust. The trust means the payout never passes through the director’s estate. When a claim is made, the money goes directly to the named beneficiaries, quickly and free of inheritance tax.
Because the company owns the policy and funds the premiums and, those costs are treated as an allowable business expense in the same way as other staff costs. The cover itself is structured to meet HMRC rules, and since it doesn’t show on a benefit in kind (P11D) return, the director has no personal tax or National Insurance liability arising from the premium payments.
The maximum sum assured is set by each insurer’s financial underwriting rules and is usually linked to the director’s age and total remuneration. Depending on the insurer, remuneration can include salary, bonuses, benefits in kind and regular dividends. Policies run on a fixed term basis, usually to retirement age or age 75 at the latest. We help you work out the right level of cover as part of the quote process.
“If you’re not sure whether your business qualifies for this type of cover, it only takes a minute to check. Most limited companies and salaried directors do — and the savings are often far more than people expect.”
At its core, this is a term life policy. It pays a lump sum to the discretionary trust if the director dies during the policy term. Most providers also include terminal illness cover as standard, paying out early if the insured is diagnosed with a condition likely to result in death within 12 months.
Standard Critical Illness Cover is not normally part of a Relevant Life plan. However, some providers offer a separate Employee Significant Illness option alongside the life cover. This is structured differently from standard Critical Illness Cover and pays on specified serious conditions, subject to the provider’s definitions.
What the cover does not include: income protection, investments, or any surrender value. It is a pure life policy – straightforward, efficient, and designed to do one job well.
Life insurance for company directors is relevant to anyone running or employed by a UK limited company who wants personal life cover without funding it from personal taxed income. In practice, that covers most sole directors, co-directors, and salaried employees of small and medium-sized businesses.
It’s particularly worth arranging if you currently have a personal life policy you’re paying for yourself. Switching to a company-funded policy – with the same insurer if you prefer – can often deliver an immediate saving without any reduction in cover. If you’re a higher-rate taxpayer, the saving is larger still because you’re no longer funding the premium from income that’s been taxed at 40%.
Contractors operating through their own limited company can also use this structure, provided they’re on the company’s payroll. Life insurance for limited company directors works the same way regardless of whether you’re a sole director or part of a larger team. We’ll confirm eligibility as part of the application process.
Many directors also pair their cover with other protection policies such as Private Health Insurance and Shareholder Protection for complete peace of mind.
The maximum cover is set by each insurer’s financial underwriting limits and is normally linked to the director’s age and total remuneration. Regular dividends can be included by some insurers, which can make a major difference for directors who take a modest salary and larger dividends.
Current insurer examples — checked September 2026:
For example, a 38-year-old director receiving a £12,570 salary plus £50,000 of regular dividends has total remuneration of £62,570. On the current published limits, that could mean a maximum of around £1.88 million with Royal London or £1.56 million with Legal & General, subject to underwriting. This is why comparing provider financial limits matters just as much as comparing the monthly premium.
Getting the most suitable Director Life Insurance is not simply about finding the cheapest monthly premium. The insurer’s financial limits, treatment of salary and dividends, underwriting approach and available policy features can all change the outcome.
My Key Finance Ltd has specialised in business protection since 2008. We can compare the market and show you both the premium and the maximum cover available before you decide how to proceed.
The cost of a Directors Life Insurance policy varies according to several factors, including:
Director’s life insurance UK premiums are based on the individual’s age, health, smoker status, the sum assured, and the policy term. For a healthy non-smoking director in their forties, a £500,000 policy can often be arranged for under £40 per month.
Here’s a straightforward worked example of why the company-funded route makes financial sense. Take a director on a £50,000 salary paying 40% income tax plus 2% National Insurance on earnings. To fund a £100 monthly premium personally, they need £172.41 of gross income. The same premium, paid by the company, costs £100 before relief, and if the premium qualifies for Corporation Tax relief, the effective company cost is about £75 at the 25% main rate or £81 at the 19% small profits rate. Against the £172.41 gross-employment-income example above, that is a substantial difference in effective cost.
As director life insurance specialists, we compare cover from a wide range of UK providers to find the most suitable option for your circumstances. Premiums are usually similar to standard Relevant Life Insurance or personal term assurance, so the main saving comes from the company paying for the cover rather than you funding it from taxed personal income.
The pension Lifetime Allowance was abolished from 6 April 2024. Director Life Insurance arranged as a Relevant Life policy is separate from your pension savings, so the cover itself does not build up pension benefits or use your pension allowances.
This makes Relevant Life useful for directors who want substantial family protection alongside their existing pension planning.
Applying for company Directors Life Insurance cover is similar to applying for a personal life policy. Once you have researched plans and providers, the next step is to fill in the application form. This can be done quickly and easily . You will be asked to provide information to get a quote for your cover. You’ll need to provide details about the medical history and lifestyle of the insured personnel.
Examples of questions you will be asked answer include:
Insurance providers will use the information you give them to figure out the premium. If you are happy with the quote and you wish to go ahead, you’ll need to complete the policy application form, which includes adding the names of the policy beneficiaries. If the company is satisfied that you meet the criteria, they will approve your application, and your cover will start on the agreed date. Your business will pay the agreed monthly or annual fee for the duration of the term.
If you run a limited company, and you’re thinking about getting life cover, there are two main options. You can buy a Personal Life Policy or take out Directors Life Insurance. Director life policies offer a raft of benefits for small businesses.
Benefits include:
Getting Life Insurance for company directors also benefits the business itself. The cover is an attractive benefit for prospective directors and can help attract them to the position.
3 Simple Steps.
Submit the details of the key member of staff
We compare the quotes
and submit application to underwriting.
What people are saying about us.
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 most suitable we found too.
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.
Jody was very helpful in explaining the options and I thoroughly recommend his 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 most suitable we found too.
Jody was very helpful in explaining the options and I thoroughly recommend his company
See how Relevant Life premiums, Corporation Tax relief, trusts and company-paid life cover are treated for UK directors.
A practical guide to company-paid life cover for directors, including eligibility, cover limits and how Relevant Life works.
Compare the potential cost of company-paid Relevant Life cover with funding personal life insurance from taxed income.
Our Aviva Relevant Life review covers key features, eligibility and what directors should know before choosing a policy.
A benefit in kind, also known as a BiK, is a product or service, which is given to a company employee free of charge or at a heavily discounted rate. All employers are legally required to disclose benefits in kind. Benefits in kind are sometimes known as fringe benefits and they are usually perks that are not included in the employee’s salary or employee benefits package.
Director’s life insurance is not classed as a P11D benefit in kind by HMRC. This means that company bosses do not have to pay additional income tax or National Insurance contributions on them.
Director’s life insurance cover is tax deductible. This type of policy is classed as a business expense. When you file your taxes, you can deduct the policy cost, reducing your corporation tax outgoings. It’s deductible primarily because it’s considered a legitimate business expense.
Here’s a concise explanation:
The UK tax authorities (HMRC) recognise it as an allowable business expense because they’re viewed as a form of employee benefit that serves a clear business purpose. By providing financial protection for key employees and their families, the policy helps the company attract and retain valuable staff. This, in turn, contributes to the stability and continuity of the business.
Since the policy is taken out to benefit the business (by protecting its crucial human assets) rather than for personal gain, the premiums can be treated as a business expense. This allows the company to deduct the cost from its taxable profits, effectively reducing its corporation tax liability.
You can check out our relevant life insurance taxation page for more details on how director’s life insurance is taxed.
It depends on the cover you take out. The more comprehensive the cover, the higher the premiums will be. You can contact us to discuss a quote for your company’s needs.
Most UK life providers offer directors cover. Examples including; IG, Aviva, Legal & General, Scottish Widows, Zurich, Liverpool Victoria (LV), Vitality, Royal London and Aegon.
To find life cover for company directors, it’s beneficial to research , use search engines, read reviews and contact companies to compare quotes and get prices.
The main areas of distinction between personal and director life insurance are their intended uses and tax implications. Director life insurance is a company-paid policy designed for employees and directors of businesses, offering tax benefits. Premiums are typically tax-deductible for the company and not treated as a benefit-in-kind for the insured. The payout is usually tax-free for beneficiaries.
In contrast, a personal policy is taken out by individuals to protect their families, with premiums paid from after-tax income with no corporate tax advantages. While both provide a payout on death, director life policy is more closely tied to one’s role in a business, whereas personal life insurance offers broader coverage regardless of employment status.
Use our relevant life calculator to see the difference in premiums and what can be saved by using director life insurance.
Standard Critical Illness Cover is not normally included within a Relevant Life plan. If you have life cover through a limited company, you may be covered if you are diagnosed with a terminal illness and you are expected to live for less than 12 months. However, Aviva offers an Employee Significant Illness option, which is structured differently from standard Critical Illness Cover.
Director’s life insurance is a life cover policy arranged and paid for by a UK limited company on behalf of a director or employee. Premiums are corporation tax deductible, the policy is written into a discretionary trust for the director’s beneficiaries, and there is no benefit in kind (P11D) charge. This makes it considerably more tax-efficient than a personal life policy, particularly for higher-rate taxpayers who would otherwise fund premiums from after-tax income.
Yes. Director life insurance and relevant life insurance describe the same type of policy. “Director life insurance” is simply the term many directors search for when looking for tax-efficient company-funded life cover. The underlying product is a relevant life insurance policy governed by HMRC rules under ITEPA 2003. The two terms are used interchangeably by most directors life insurance companies and advisers.
Premiums for life insurance for directors depend on age, health, the sum assured, and the term. A non-smoking director in their forties can typically arrange cover for under £40 per month. After corporation tax deductible relief at 19%, the real net cost to the company is lower still. The best way to get an accurate figure for your situation is to request a quote – it takes a few minutes and there’s no commitment.
Some providers offer an Employee Significant Illness option alongside Relevant Life cover. It is not the same as standard Critical Illness Cover and uses its own definitions and benefit structure. We check availability and the conditions covered when comparing director life policies.
Cover limits vary by insurer rather than following one universal HMRC multiple. Royal London currently allows up to 30× total remuneration below age 40, 25× at ages 40–49, 20× at 50–59 and 15× from age 60. Legal & General currently allows up to 25× remuneration through age 49, 20× at 50–59 and 15× at 60–73. Both can include regular dividends in total remuneration, subject to their underwriting rules.
Director, My Key Finance Ltd – FCA Regulated (FRN 628996)
“After more than 22 years in mortgage and protection advice, I still meet many who pay personally for life cover when it could be funded through their company — saving up to half the cost. This page explains exactly how to do it the right way.”
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Director’s Comment
“When I explain this to directors for the first time, they’re often surprised by the savings. Where the policy meets the Relevant Life conditions, company-paid premiums are normally not treated as a P11D benefit in kind — one of the simplest ways to protect your family and keep more of your income.”
— Jody Pearmain, Director of My Key Finance Ltd · Connect on LinkedIn