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Relevant Life Insurance is a tax-efficient solution for employers looking to provide individual death-in-service benefits to their employees. This type of term assurance offers a lump sum payment if the insured employee passes away during the policy term or is diagnosed with a terminal illness while employed. Importantly, the premiums for a Relevant Life Plan are paid by the employer, differentiating it from standard personal life cover.
Relevant Life Cover is an ideal choice for businesses of all sizes, particularly small and medium-sized enterprises (SMEs) that do not have a group life insurance scheme. Here’s why it makes sense:
Relevant Life Cover allows employers to offer valuable death-in-service benefits without the need to set up an expensive group scheme.
Premiums are generally considered an allowable business expense by HMRC, meaning they qualify for Corporation Tax relief, provided they are wholly and exclusively for business purposes.
As premiums are paid directly by the business, they do not count as a benefit in kind, avoiding additional taxation for the employee.
No employer or employee National Insurance contributions are required on the premiums.
Helps attract and retain key staff by offering valuable life cover as part of the employee benefits package.
Unlike standard life insurance, the policy does not count towards the employee's lifetime pension allowance, which is particularly beneficial for high earners.
Policies can be tailored to meet individual requirements, including the level of cover and duration.
If the employee changes jobs, the plan can often be transferred to a new employer or converted into a personal policy, maintaining continuous protection.
Writing the policy into a discretionary trust ensures that the lump sum payout does not form part of the employee’s estate, helping to avoid Inheritance Tax.
Beneficiaries receive the payout tax-free, providing additional financial security.
Policies are written under trust from the start, which keeps the payout outside the employee’s estate for Inheritance Tax purposes.
The process is straightforward, with minimal administrative burden on the business.
Relevant Life Cover is an ideal choice for businesses of all sizes, particularly small and medium-sized enterprises (SMEs) that do not have a group life insurance scheme. Here’s why it makes sense:
Offering death-in-service benefits shows a commitment to your staff’s long-term welfare, boosting morale and loyalty.
Offering death-in-service benefits shows a commitment to your staff’s long-term welfare, boosting morale and loyaltyDemonstrating that you care about employees’ futures helps you attract top talent and maintain a committed workforce.
Providing relevant life cover shows that your business takes its duty of care seriously, reflecting positively on your corporate image.
By leveraging the tax advantages of Relevant Life Cover, your business can provide valuable benefits at a lower net cost compared to standard life insurance policies.
To maximise tax efficiency and ensure that the policy benefits are excluded from the employee’s estate for Inheritance Tax purposes, it is recommended to write the Relevant Life Plan into a discretionary trust from the outset. This ensures that the lump sum is paid directly to the employee’s chosen beneficiaries, providing financial security without the burden of additional taxation.
Investing in a Relevant Life Plan shows your commitment to your employees’ welfare while taking advantage of tax efficiencies for your business. To explore tailored options for your organisation, click the button below and complete the form. One of our expert advisers will be in touch promptly to discuss your specific requirements.
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Harmony Health Cover Limited is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. Harmony Health Cover Limited is registered in England and Wales with company number 10328657. Registered address – 1 Winston Parade, 55 Lymington Road, New Milton, BH25 6PT. The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK. We are not responsible for the content of any third party links.
