Relevant Life Policy UK

What is a relevant life policy?

A relevant life policy is a life insurance policy arranged and paid for by an employer for the benefit of an employee (or their family). Unlike a group life scheme, it covers one individual — making it ideal for small businesses, directors, and high earners.

Who is a relevant life policy for?

• Company directors who want tax-efficient life cover
• Small businesses wanting to offer life cover to one or two key employees
• High earners whose group life benefit exceeds the HMRC pension lifetime allowance
• Businesses that don't have enough employees for a group scheme

How much can I insure?

HMRC limits the cover to a multiple of total remuneration (salary plus benefits). Most insurers allow up to 15–25 times the employee's total package, subject to HMRC rules and individual underwriting.

How is it different from a personal life insurance policy?

With a personal policy, premiums are paid from after-tax income. With a relevant life policy, the company pays the premiums, gets corporation tax relief, and the employee receives no benefit-in-kind tax liability — making it significantly more cost-efficient.

Example saving

A director paying basic rate tax could save 20%+ on the effective cost of their life insurance by arranging it through a relevant life policy rather than paying personally. Higher and additional rate taxpayers save even more.

Is a relevant life policy in trust?

Yes — almost always. The policy is written in a discretionary trust from the outset, so the payout bypasses the estate and reaches beneficiaries quickly, without probate delays or inheritance tax.