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 the organisation.

More and more company owners and directors are catching on to the benefits of Relevant Life Insurance. Historically it’s only been large companies that have been able to offer life insurance as a company perk with group life policies paying 4 or 5 times income.  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 employees.

If you are the owner of a small company it’s certainly worth thinking about even if it’s just for yourself. With Relevant Life Insurance you can save up to 50% against a personal life insurance policy. So if you are a business owner looking to take out life insurance, why would you ignore Relevant Life Cover?

Try out our relevant life calculator and work out how much you can save. Alternatively why not just compare relevant life insurance quotes online and start saving money.

Start Saving Money

Who can take out a Relevant Life Policy?

Often, small businesses don’t have enough employees to be able to offer a registered group life scheme. Now They Can!

  • 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 covered must remain an employee of the company to be covered.  Being a shareholder alone does not entitle you to take out relevant life cover and therefore Shareholder Protection Insurance may be more suitable. There are options to move the policy to a new company or to a personal life insurance if needed.

Advantages of Relevant Life Cover

Offering Relevant Life Cover to your employees is great for employee retention..

There are fantastic cost savings of using relevant life cover due to its tax efficiency. But that’s not all. Your employees will love you and will be more likely to stay and work hard.

  • Premiums are paid by the company and are tax deductible. (unlike some group schemes)
  • Any Benefits are usually free from inheritance tax.
  • All policies are set up using a discretionary trust which speeds up benefit payments.
  • Relevant Life Cover can be up to 50% cheaper personal life insurance
Relevant Life Calculator Example

The advantages stretch beyond the bottom line, however, studies have shown that companies who show care towards their employees and provide perks, have a lower-staff turnover and also benefit from higher productivity.

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

Relevant Life Tax Treatment

Relevant Life Insurance can be offset against corporation tax!

Relevant Life Tax Pic

A relevant life trust must be in place in order for the policy to be set up correctly. This is normally quite easy to do and with most providers we are able to set this up over the phone using an online trust. HMRC will treat the premiums as an allowable 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 massive advantages and huge savings against normal life insurance. You can read more details into relevant life HMRC tax treatment here.

Or why not get a quote and start saving money..

Relevant Life & Significant Illness

Historically relevant life cover has always been a life only policy which included terminal illness.

We can now offer the option to include significant illness with Relevant Life Insurance. Aviva’s new ‘Relevant Life Cover with Significant Illness’ is available with the same tax benefits as a normal relevant life policy. It is a great added benefit and alternative for those companies that want to go over and above for their employees.

Along with adding significant illness you can still add:

Key man insurance experts

Offering relevant life cover with significant illness 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 Relevant Life with Significant Illness 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.

Relevant Life Calculator

Work out how much money you can save with our relevant life calculator. Our calculator will allow you to compare the net cost of a personal life insurance policy against a relevant life policy. Simply add the below details and see how much you can save.

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Ordinary life policy

Employee National Insurance

Employee Income Tax

Employer National Insurance

Corporation Tax relief

Net cost

Gross Dividend needed

Corporation Tax paid

Gross Profit to pay dividend

Relevant life policy

Corporation Tax relief

Net cost

Total saving of

 

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

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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 Our Team

Our dedicated team are experts in Relevant Life Cover and can offer you FCA qualified advice and 1st class support throughout the process.

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

Key Person FAQ

No, not all of them. It all depends on where you live. In some areas of the country, a nurse can visit the applicant at their workplace or their home, whichever is most convenient. In other areas of the country, visits at home or the workplace are not possible, and it’ll be necessary to visit a surgery.

If you’d like to get more information about taking out this type of policy for one or more of your company’s employees, then you can use our ‘Get a Quote’ form or give us a call on 020 7112 8844.

There are several additions policies that can work in conjunction with this type of plan. One such example is Increasing Cover. This will automatically raise the coverage in line with the RPI (Retail Price Index) or a predetermined, set percentage. There is also Life Change Benefit, which makes it possible to adjust the policy should the employee’s personal circumstances change. As well, there’s continuation benefit, which allows the policy to be transferred to another company or to become a privately held policy.

What is the advantage of Increasing Cover?
Essentially, this protects the applicant against rising costs, which could devalue their payout. This type of coverage automatically raises the level of coverage in line with the retail price index, or by another set amount. So, for example. Let’s say a policy is taken out by someone in their early thirties. If a claim is made some thirty years in the future, it’s possible that the original value is worth much less than what it was when the policy was first taken out, because prices have gone up. If Increasing Cover is added to the policy, the amount of coverage will continue to rise, so it’ll still have the same value, no matter when it’s paid out.
What’s is Life Change Benefit?
This accounts for a change in an employee's personal situation. For example, if a person has since had two extra children since the policy was first taken out, then this would allow for the policy to be changed, to better reflect their situation. They would have greater coverage, because the costs of their living situation have risen considerably, and they’d need to leave more money for the family.
What is the advantage of continuation benefit?
It’s unlikely that an employee is going to work for the same company forever, especially if they’re relatively young. With this, the employee is able to take their policy with them should they move on and work for another company.

In general, policies are limited to twenty times the value of a person’s salary. If a person is earning £40,000, then that’ll mean their coverage will be for £800,000. However, this is not a hard and fast rule. For example, if you’re earning, say, £200,000 per year, then it’s unlikely that the policy would be for £4,000,000, because most people don’t need to be covered for more than £1,000,000. Financial evidence is often requested for applications over £1.000,000.

It all begins with the application process. At this stage, an application is put forth on behalf of the employee who will be receiving the coverage. As part of the application process, the applicant will be assessed on things such as their overall health, lifestyle, age, and the amount of coverage requested. Once the cost of the premium has been assessed, the process can move onto the next stage. It’s important to keep in mind that although much of the legwork -- such as filling out the paperwork and so on -- is conducted by the employee, it’ll be the company that pays the premium.

No. Only employees of a UK Ltd company or UK LLP are eligible for this type of coverage. Freelance workers, the self-employed, and sole traders will need to look for a different type of life coverage policy.

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

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.

This is sometimes necessary, but not always. There are various factors that determine whether a medical exam is necessary, or not. It’ll depend on things such as the age and health of the applicant, as well as the value of the coverage they’ll be covered for. If the policy is to be for more than £500,000, then a medical is nearly always required. If the applicant is over the age of fifty or has (or had) health problems, then it’s also likely that a medical will be requested before a policy is awarded.

How much is does it cost?

Like most insurance types, the cost of the policy is determined by a plethora of factors, which makes giving an approximate cost more difficult. In terms of ballpark estimates, it’s wise to consider the cost of the policy to be somewhat in line with the cost of a traditional life insurance policy. However, it’s important to note that not all insurance providers offer this type of coverage, so the number of policies available will be fewer, which may affect the cost. As with life insurance, the cost will be determined by the health, age, occupation, lifestyle and so on of the covered party, as well as the level of coverage requested. It’s important to keep in mind that the cost of the insurance policy can sometimes mask its true value; once the tax benefits have been factored in, your business can make significant savings. To get a good idea of how much you can save, use our relevant life calculator, or to get a quote either give us a call on 0207 112 8844 or fill in the above quick quote form. 

Are all medicals conducted at a medical facility?

No, not all of them. It all depends on where you live. In some areas of the country, a nurse can visit the applicant at their workplace or their home, whichever is most convenient. In other areas of the country, visits at home or the workplace are not possible, and it’ll be necessary to visit a surgery.

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 by how long the underwriter needs to underwrite it. This could take anywhere from a few days to a few months -- it really depends on the complexity of the application, including the health and lifestyle status of the person who is to be covered and also the sum assured. There are some factors that can hold up an application, however. For example, the one that causes the most problems is the trust document, which is a requirement for this type of policy. It is filled in by the person who will be covered, which is usually straightforward, but then the document has to be signed by a witness. This can take some time. Other things, such as waiting for a GP report and other medical records are reliant on people who don’t have a vested interest in speeding up the process, can also cause delays. In most cases we can now fill in the trust document online, which means there is little to delay the process. With the advent of online trusts, cases where the covered person is healthy and the sum is not too high, a policy can be up and running on the same day as application.

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.

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?

How much coverage the applicant requests will depend on a number of factors, such as their current salary, the cost of their mortgage, other bills, and how many people they have in their family. For example, if a person has a large mortgage, high salary, and a partner and three children that they provide for, then they will look to have high-value coverage. This is because, in the event that something happens to them, their family, who otherwise depended on that person’s salary to meet their expenses and afford their lifestyle, would continue to have a lot of expenses.
On the other end of the spectrum, you might have an employee who only has a small mortgage, no children, and a partner who also has a high-paying job. In this case, it would make little sense to take out a high-value policy, since it’s unlikely that there would be too many outstanding debts or financial difficulties. The higher the sum assured the more expensive the policy so this may also be restrictive on the amount you go for.

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 75.

Can we add critical illness?

(UPDATED 2018) There is now the option to add significant illness to a policy. This is a new product offered currently only through AVIVA. Although similar to critical illness cover there are some differences due to the tax allowances from HMRC.  For more detail on Aviva's relevant life with significant illness click here. Please call to request details on the specific differences or to get a quote.

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