Relevant Life

For financial advisers only

Relevant Life is a life insurance policy available to employers to provide an individual death-in-service benefit for an employee. It can help smaller businesses attract and retain high-calibre staff by offering them attractive benefits packages that are also tax efficient. It can also be a tax-efficient way for shareholder directors to take out life insurance.

The following information is based on our understanding of current legislation, taxation law and HM Revenue & Customs (HMRC) practice, which may change.

Tax benefits

There can be tax benefits for both the employer and employee.

Employer benefits:

  • Corporation tax relief (so long as the premiums are wholly and exclusively for the purposes of the business).
  • No National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy.

Employee benefits:

  • No National Insurance contributions to pay on the policy payments paid to fund the Relevant Life policy.
  • The policy payments won’t be taxed as a benefit in kind.
  • Policy payments and benefits don’t count towards annual or lifetime pension allowances.

Trustee flexibility

The employer should arrange for the Relevant Life policy to be written in trust for the benefit of the employee’s family. This will help to fulfill the legislative requirements for a Relevant Life policy and also in most cases, it should help to mitigate inheritance tax.

If your client is a shareholder director with 100% shareholding in the business, and the business is the sole trustee, the trust will be locked up if they die until another director is appointed to act on behalf of the business. We appreciate that whether or not being a trustee brings benefits depends on how your client’s business is set up. That’s why we offer the choice of becoming a trustee or not.

Becoming a trustee – If the worst should happen the employer can make sure that the employee’s wishes are carried out as they’d intended. It’s a small, easy step for employers to take, but it could make a real difference to the employee’s family and help them to retain loyal staff. 

Choosing to not become a trustee – If your client is a director with 100% shareholding in the business, and the business is the sole trustee, the trust will be locked up if they die. To avoid this, we don’t insist on a corporate trustee.

Portability

Our Relevant Life cover is portable, so the insured person can take it with them if they move jobs. They can then either continue making the policy payments themselves, or ask their new employer to take over this payment as part of their benefits package. Any employer who makes the payments on their employee’s behalf may be eligible for corporation tax relief on the payments.

Immediate cover facility

Imagine you have a client with a healthy employee. They want cover in place as soon as possible and are happy with the premium - but underwriting is required due to the level of cover. What can you do to get the cover in place quickly?

Our immediate cover facility (PDF)(Opens new window) is designed for just this reason. We can provide immediate cover for the first 60 days while any necessary medical information is being requested. For us to consider this, we’ll need a completed application form with no adverse disclosures, a fully completed Direct Debit Instruction, payment for the first 60 days premium by cheque or Direct Debit, and all financial evidence.

More than just financial support

Relevant Life customers will have access to our protection support services at no extra cost. Our key person replacement service (PDF)(Opens new window), provided by our partners Cazden, can help policyholders replace key personnel on either a temporary or permanent basis. While our health and wellbeing service (PDF)(Opens new window), provided by our partners Heath Assured, can offer confidential help and support on a wide range of issues to both the policyholder and insured person. What’s more, they don’t need to make a claim to use these services – they can be accessed throughout the life of the policy.

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