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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. If an employee with the dies while they’re working for the company, the beneficiaries of that employee - such as the spouse, children, or another family member - will receive a lump sum payment.  The policy functions as a way for the company to offer additional perks to their employees, usually directors and key staff, but in fact anyone who is employed.  The policy is solely-paid for by the company. However, while it’s primarily offered as a benefit to employees, there are benefits to the business too, as the policy can be offset for corporate tax. 

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.

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

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 & Significant Illness

Historically relevant life cover has always been a life only policy which included terminal illness. We can now offer the option to includes cover which covers significant illness as well. Aviva's new Relevant life with Significant illness is now available with the same tax benefits as a normal relevant life policy. Its a great added benefit and alternative to for those companies that want to go over and above for their employees.
Along with adding significant 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 significant illness cover 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. 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.

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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 MyKeyManInsurance.com (My Key Finance Ltd)

Tyler Pearmain

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

Keri Gardiner

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

Relevant Life Cover FAQ

Who can take out a Relevant Life Plan?

Only two entities are eligible to take out this type of insurance coverage: UK Limited companies and LLP’s, otherwise known as a Limited Liability Partnership. The person receiving the coverage must be a resident of the UK.

What options can be added to a Policy?

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.

Who owns the policy?

The policy is technically owned by the company, not the employee that is covered. However, it in effect belongs to the employee, since any payout would be paid to the beneficiaries of the trust names by the employee.

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.

Can I transfer Relevant Life Insurance to another company?

Yes. If the employee moves to another employer, it’s possible to essentially take the policy with them. It will then be paid by the new employer. If the employee leaves but doesn’t go to work for another company, the policy can be changed into a personal policy, which is then paid for by the individual. There are certain time scales in which a policy must be transferred once someone has left and these vary but are often 21 days.

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. 

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.

Can I transfer Relevant Life Insurance to another company?

Yes. If the employee moves to another employer, it’s possible to essentially take the policy with them. It will then be paid by the new employer. If the employee leaves but doesn’t go to work for another company, the policy can be changed into a personal policy, which is then paid for by the individual. There are certain time scales in which a policy must be transferred once someone has left and these vary but are often 21 days.

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. 

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.

Will I have to have a medical?

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.



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