Relevant Life Insurance

Relevant Life Insurance

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What is Relevant Life Insurance?

Relevant Life Insurance is a company owned insurance policy that allows businesses to offer life insurance to specific employees within a business.

More and more company owners and directors are catching on to the benefits of Relevant Life Insurance. But still its probably one of the most undersold insurance policies on the market.

Historically it’s only been large companies that have been able to offer death in service benefits to their employees via a company group life scheme.  Policies such as death in service pay 4 or 5 times income on death are the norm. But only for the large corporations.  But with Relevant Life Cover, small and medium companies can now offer the same. In fact many of our clients only have between 1 to 5 people employed.

If you are the owner of a small company or one of the company directors it’s certainly worth thinking about. Even if it’s just for yourself.

With Relevant Life Insurance you can save up to 50% against the equivalent personal life insurance. So if you are a company director looking to take out a life insurance policy, why would you ignore  this cover?

Try out our relevant life calculator and work out how much you can save. Or alternatively, why not just compare relevant life insurance quotes online.

Who can take out a Relevant Life Policy?

Small businesses don’t have enough employees to be able to offer a registered death in service benefit. But there is an alternative!

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  • Only UK Ltd companies or LLP’s can take out the cover. Partnerships and sole traders can not.
  • The life assured must be a UK resident and a PAYE employee.
  • The policy must be written into a discretionary trust.

The life assured must remain an employee of the company throughout the term.  Being a shareholder alone does not entitle you to take out cover.

You can transfer the policy new company or to a personal life insurance if needed.

Advantages of Relevant Life Cover

Offering Tax Efficient Relevant Life Cover to your employees is great for employee retention!

There are fantastic cost savings of using a relevant life plan due to its tax efficiency. But that’s not all. Have you considered how much your employees will appreciate having a death in service benefit? A policy which will pay out a tax free lump sum of money to their loved ones in the event of their death.

  • Premiums are paid by the company and are tax deductible. (unlike some death in service schemes)
  • Any Benefits are paid as a tax free lump sum and are usually free from inheritance tax.
  • All policies are set up using a discretionary trust which speeds up benefit payments.
  • Plans will benefit high earning employees as these plans do not count towards a Pension Lifetime Allowance.
  • It can be up to 50% cheaper personal insurance
  • No national insurance contributions.
Relevant Life Calculator Example

The advantages stretch beyond the bottom line.

Studies have shown that business owners who show care towards their employees and provide perks, have a lower-staff turnover and also benefit from higher productivity

A relevant life plan functions as both: it functions as part of a company’s wellness program and also offers employees an incentive to stay.

Relevant Life Insurance Tax Treatment

Premiums can be offset against corporation tax!

Relevant Life Tax Pic

A relevant life trust forms the basis of the policy. Without a trust in place the policy will not be set up correctly. This is quite easy to do and with most providers we are able to set this up for you online.

Is a relevant life policy a benefit in kind?

HMRC will treat the premiums as an allowable business expense which means they are not included as a P11D benefit in kind. This means the premiums and benefits usually qualify for relief on:

  • Income tax
  • Capital gains tax
  • Corporation tax.
  • National insurance

Of course, rules on taxation can change. But for now, you are looking at huge savings against normal life plans in a tax efficient way. You can read more detail on relevant life HMRC tax treatment here.

Or why not get a quote and start saving money.

Who Owns A Relevant Life Policy?

Each policy is owned by the company with an employee as the life assured. A lump sum benefit is paid to the life assured’s family in the event of death.

Historically relevant life cover has only covered death and terminal illness. But we can now offer the option to include significant illness.

Aviva’s new ‘Relevant Life Plan with Significant Illness’ is available with the same benefits. It is a great add-on for those companies that want to go over and above for their employees.

Some providers will also allow you to add:

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Offering relevant life insurance to your employees will really show that you care.  In the event of a claim, this will give them the financial support they need to help them focus on recovery.

For a detailed review of Aviva’s Significant Illness contract, please check out our blog here. This policy has been designed to meet the requirements defined in section 393(B)(4) of the Income Tax (Earnings and Pensions) Act 2003.

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    Jody Pearmain of Keyman was very helpful in explaining options and I thoroughly recommend his company

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    Did everything we wanted very well. Decent price and made easy..

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    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.

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  • The services received was great

    The services received was great. Many thanks to these professionals at mymainsurance. I will definitely use them again.

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  • First Class Service

    The standard of service from MyKeyMan 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.

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Meet The Business Protection Team

Our financial advisors are experts in Business Protection. We offer FCA qualified advice and 1st class support throughout the process. Why not just give us a call!

meet our team

Jody Pearmain
Jody Pearmain

Managing Director & Founder (My Key Finance Ltd)

Lori Norton
Lori Norton

Administration Manager at MyKeyManInsurance.com (My Key Finance Ltd)

Tyler Pearmain
Tyler Pearmain

Senior Keyman Insurance Adviser at MyKeyManInsurance.com (My Key Finance Ltd)

Keri Gardiner
Keri Gardiner

Customer Service & Website Admin at MyKeyManInsurance.com (My Key Finance Ltd)

Relevant Life Cover FAQ

How much cover can we go up to?

In general, policies are limited to twenty times the value of a person’s salary. If a person is earning £40,000, then the amount of cover could be an £800,000 tax free lump sum.

The limit for relevant life insurance is 20 x salary. Normally a provider will accept a policy under £500,000 without the need for financial evidence.

How does the application process work?

The 1st step is for the life assured is to run through an application which is mainly questions relating to medical history. This can be submit over the phone with an advisor or online using our new online application.

Once an application is submit it can either be accepted straight away or referred to underwriting. On acceptance the advisor will notify the company and the policy can start on your chosen date.

Can anyone take out a Relevant Life Policy?

No. Only employees of a UK Ltd company or UK LLP are eligible. Freelance workers, the self-employed, and sole traders will need to look at personal cover.

Can we add critical illness?

(UPDATED 2018) There is now the option to add significant illness to a policy. This is currently only available through AVIVA. Although similar to critical illness cover, there are some restrictions. For more detail on Aviva’s relevant life with significant illness click here

Terminal illness is included with all policies and a lump sum payout can be made early if the life assured is diagnosed with terminal illness.

Can an LLP take out Relevant Life Cover

Yes, when it comes to taking out this type of insurance policy, an LLP is treated the same as a Limited Company.

How much should I insure the person for?

This will normally be dependant on their current salary. But there really isn’t a fast rule to how much cover someone will need. Many employees follow the 4x salary rule taken up with most group life schemes. Its really down to yourself and the employee and of course how much you are willing to spend on premiums. But in essence small companies can now offer a death in service benefit or group life insurance to their employees.

Does it have to be a UK company to take out the cover?

Yes, the company must be registered in England, Wales, Scotland, or Northern Ireland to be eligible. Overseas applications are not accepted.

How long does it take to set up a policy?

The length of time between submitting an application and the policy going live is determined initially by the life assured age and the sum assured. A young person with a relatively low sum assured can be accepted straight away online. However  it really depends on the complexity of the application, including the health and lifestyle of the person.

Generally a person over 40 with an amount of cover more than £500,000 will expect to need further underwriting. This could include a nurse screening and a request for further medical evidence.

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