When it comes to looking after your people, Relevant Life Cover is one of the most tax-efficient and meaningful ways a business can offer protection.
What Is Relevant Life Cover?
A Relevant Life Plan is a life insurance policy taken out by a business to cover an employee or director. If the insured person passes away, the payout goes directly to their chosen beneficiaries — not the business.
It’s essentially a death-in-service benefit, tailored for small businesses that don’t qualify for group life schemes due to limited staff numbers.
Who Is It For?
Relevant Life Cover is ideal for:
- Small businesses with fewer than 5 employees
- Directors who want life cover paid for by the business
- Employers looking to offer a valuable benefit to attract and retain talent
To qualify, the person insured must be an employee — including employed directors.
Why Is It Tax-Efficient?
Relevant Life Cover offers several tax advantages:
- Corporation Tax Relief: Premiums are usually treated as an allowable business expense.
- No Benefit-in-Kind Tax: Employees typically don’t pay income tax on the premiums.
- No National Insurance Contributions: Premiums paid by the employer are usually exempt.
- Preserves Pension Allowance: Premiums don’t count towards the employee’s annual pension allowance.
We always recommend involving your accountant in the advice process. We’re happy to work alongside them to ensure the cover is right for your business.
What Happens If the Employee Dies?
The policy is written into a trust, so the payout goes to the employee’s chosen beneficiaries free of tax. This ensures the money reaches loved ones quickly and efficiently.
Can the Cover Be Transferred?
Yes — if the employee leaves the business, they can:
- Transfer the policy to a new employer
- Convert it into a personal life insurance policy
This flexibility is especially valuable if the employee’s health has changed since the policy was taken out.
Let’s Talk
Relevant Life Cover is a powerful way to protect your team and offer meaningful benefits — all while being tax-efficient.
If you’d like to explore how this could work for your business, we’re here to help.
You can book an initial consultation by clicking here or by sending us a web message: https://onerooffinancial.co.uk/contact/
Blog written 28/10/2025
The information contained within this blog was correct at the time of publication (28/10/2025), and is subject to change.
