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Relevant Life Insurance
A tax-efficient alternative to traditional personal life cover.
Call us 01625 462 744
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Did you know it's now possible for your company to set up life insurance for you, for the benefit of your family?
And that your company can pay the premiums too?
Even better, this is an allowable business expense. Higher rate tax payers could save up to 49%!
To take advantage of this opportunity, we can help you set up a Relevant Life Insurance policy.
How it works:
- Instead of paying for your life cover with your personal taxed income, your business pays the premiums instead.
- The policy is written in trust, for the benefit of your family and therefore does not form part of your estate for Inheritance tax purposes.
- Is it a taxable benefit? Premiums paid by employers aren't normally assessable on the employee as a benefit in kind, so they're not subject to income tax. Also, premiums paid by employers aren't normally assessable for employer or employee National Insurance contributions.
Are there any potential drawbacks?
Cover must cease by age 75 at the latest, the maximum amount of cover depends on your age and earnings at the time of application and Critical illness cover cannot be included.
How much tax could you save?
Use this handy calculator to compare the cost of a Relevant Life Cover to the cost of an ordinary Life Cover:
The example below shows how a Relevant Life Policy can cut costs:
| Ordinary life cover | Relevant life policy | |
|---|---|---|
| Premium | £1,000 | £1,000 |
| Company gross costs: | ||
| Employee's National Insurance contribution at 2% | £34 | Nil |
| Income tax @ 40% | £690 | Nil |
| Employer's National Insurance contribution at 13.8% | £238 | Nil |
| Total company gross cost | £1,962 | £1,000 |
| Corporation tax relief at 19% | £372 | £190* |
| Net cost | £1,590 | £810* |
*Assumes that corporation tax relief at 19% has been granted under the 'wholly and exclusively' rules. In both cases we've assumed a payment of £1,000 each year for the life cover on an employee who's paying income tax at 40% and employee's National Insurance at 2% on the top end of income. We've also assumed that the employer is paying corporation tax at the small profits rate of 19% and will pay employer's National Insurance at the contracted-in rate of 13.8%.
Did you know?
Only 28% of business owners
have ever set up a Relevant Life Plan
and 69% have never even heard of a Relevant Life Plan!
Statistics from a 2019 Legal & General survey
Unsure if you need Relevant Life Cover?
Want to know more?
Call us 01625 462 744
Before calling us, please make sure you have read and understood our Privacy Notice .
We don't charge you a fee
If you start a policy, we will be paid a commission by the insurance company. The insurance company will usually pay for any doctor's fees if reports are required.