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What is Relevant Life Insurance

Relevant Life Insurance is set up to allow employers to offer tax efficient life or critical illness to their employees. Both types of cover include terminal illness.  The policy is owned by the company and paid for by the company. Relevant Life is set up with a trust where individual people, usually a partner, child or family member can be paid from any claim.

Feel free to try our relevant life calculator to work out how much you can save. MyKeyManInsurance has access to all the top providers of relevant life insurance and will be happy to talk you through how it works or give you a quick quote.

Qualifying For Relevant Life

Relevant Life Plans are designed to enable small businesses to take advantage of the same tax breaks served by group life schemes in large corporations. Therefore any UK Ltd company or LLP can qualify and can now offer their employee's tax efficient life insurance. The life assured must be a UK resident and a PAYE employee. The life covered must remain an employee of the policy holder in order to be a valid relevant life policy. There are options to move the policy to a new company or to a personal life insurance if needed.

Advantages of Relevant Life

There are fantastic cost savings of using relevant life due to its tax efficiency. The company is able to set up life & critical illness insurance for its employee's at a much cheaper rate than the life assured can set up a personal policy.
  • Premiums are paid by the company and are tax deductible
  • Any claim would trigger a tax free lump sum paid to the employee.
  For directors this can mean a 20% saving on corporation tax and then depending on your tax bracket and extra huge saving by not having to pay premium using your already taxed income.    

Relevant Life Tax Treatment

Assuming the policy is set up correctly HMRC will treat the premiums as an allowable expense which means they are not included as a P11D benefit. 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 massive advantages and huge savings against normal life insurance. You can read more details into relevant life HMRC tax treatment here.

Relevant Life & Critical Illness

Critical Illness is now available to add to a relevant life policy. Historically relevant life cover has always been a life only policy which included terminal illness. We can now offer the option to include critical illness with the same great tax benefits.  
Along with adding critical illness you can still add:
  • Increasing Cover - The sum assured can automatically increase along with RPI or a fixed percentage.
  • Life Change Benefit - If the life assured circumstances change you take take out additional cover without the need for further medical underwriting.
  • Continuation Benefit - The policy can be transferred to the life assured new employee or to a personal policy.
  Offering critical illness to your employee's really will show that you care about their well being and in the event of a claim will give them the financial support they need to help them focus on recovery. 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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meet our team

Our dedicated team are here to offer you expert FCA qualified advice along with 1st class support to make sure the process is fast and simple.

Jody Pearmain

Managing Director & Founder (My Key Finance Ltd)

Lori Norton

Administration Manager at (My Key Finance Ltd)

Tyler Pearmain

Senior Keyman Insurance Adviser at (My Key Finance Ltd)

Keri Gardiner

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

Relevant Life Cover FAQ

Who can take out a Relevant Life Plan?

UK Limited companies or Limited Liability Partnerships (LLP’s) The life assured has to be a UK resident.

Who owns the policy?

The policy is owned by the company. However any claim would be paid to a trust which is run through the trusties.

Can I transfer Relevant Life Insurance to another company?

You can transfer a the policy to a new company or to a personal policy.

How much is does it cost?

Relevant Life Insurance is normally very similar in cost to a normal term life insurance. However not all providers in the market offer relevant life so the market is somewhat smaller. However due to the tax advantages of a relevant life policy you can make huge savings. Use our relevant life calculator to see how much you could save. You can also use out enquiry form to get a quote for relevant life insurance.

How long does it take to set up a policy?

Once an application has been submit to the underwriter is can take anything from a few days to a few months to underwrite. It really depends on many factors including the health of the life assured. Normally a healthy person should expect to have a policy up and running within 2/3 weeks. Relevant life cover needs a trust document to be filled in by the life assured which normally means witness signatures. We normally find that this is the part which may hold up the policy underwriting. Of course normal underwriting such as waiting for GP reports or medicals to take place are reliant on a third party so its sometimes down to the client. There are providers which allow us to fill in the trust documents online which means that a clean policy can be accepted and started straight away.

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


Can an LLP take out Relevant Life Cover

Yes LLP’s are treated the same as limited companies.

How much should I insure the person for?

Although a relevant life policy is seen as business protection its really for the benefit of the life assured’s family through a trust. So its really down to the individual to decide the level of cover. We normally suggest people take into account outstanding debts such as mortgages but also think about money that the remaining family will need for general living. Relevant life insurance is can be taken out at up to 15x or 20x the persons salary.

Is Relevant Life Insurance tax deductible?

One of the main benefits is the fact that it is seen as a company expense and is therefore tax deductible. The policy is also placed in a trust which is outside of the estate. This can help with inheritance tax issues as well. Information regards to taxation levels and basis of reliefs are dependent on current legislation. Individual circumstances are not guaranteed and may be subject to change. The Financial Conduct Authority do not regulate trusts.

How long should we take out the cover for?

As everyone knows the likelihood of death becomes higher as you get older. Relevant life plans are normally a guaranteed premium so its good to lock the premium in when you are young for as long as you can. Some providers will allow a term up to age 70.

Can we add critical illness?

(UPDATED 2016) Yes you can now add critical illness to a relevant life policy.

Will I have to have a medical?

This depends on age, health and sum assured. Policies over £500,000 normally always require a medical no matter where we place it.

Can a medical be carried out at home?

Depending on where you are in the country a nurse can come out to your work place or home. It may be necessary to visit the nearest surgery.

Is there a limit on how much Relevant Life Insurance I can take?

The limit is normally 20x salary. However normally anything under £1.000,000 is fine for anyone.

Can anyone take out a Relevant Life Policy?

You have to be employed by a UK Ltd company or UK LLP to take out cover.

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