Relevant Life Insurance

Relevant life policies are arranged by an employer for the benefit of an employee. They are often based on a multiple of an employee’s salary and the multiple is normally based on the employee’s age. In the event of a successful claim, the policy would pay out a tax-free lump sum to the employee’s beneficiaries (usually their partner or dependants).

A relevant life policy will cover one employee. However, an employer can take out individual policies for multiple employees.

Relevant life policies are not considered a benefit-in-kind. They’re generally considered to be an allowable business expense, so employees won’t need to pay income tax or National Insurance on the premiums.

No, by definition a sole director or trader is not considered an employee and does not have an employer that can take out the policy for them. A sole trader can take out a relevant life policy for any of their employees.

No, relevant life policies provide different benefits to shareholder protection.

Shareholder protection is designed to benefit the other shareholders in the business so that they can purchase the deceased’s shares in the event of the death or critical illness of a shareholder.

Relevant life insurance pays out to the employees’ beneficiaries (usually their partner or dependants) so that they are financially provided for. Relevant life insurance can be taken out for any employee in the business.

Employers may choose to take out both shareholder protection and relevant life insurance.

No, lump sum pay-outs are not taxed.

Policies are available for employees between the ages of 16 and 73.

The employer is the owner of the policy as they pay the premiums.